Best Mutual Fund for SIP

Which is the best mutual fund for SIP? I think this is the most common question I came across; be it TFL, through mail or even newspapers where I answer personal finance query section. Sometime I replied – sometime I ignored – sometime I made up my mind to write but dropped idea after few minutes. People who are regular readers must be knowing why I am not able to answer this question – others can read my earlier article on Magic of Systematic Investment Plan (SIP).

But Anil Kumar Kapila came as much needed help – he prepared a short note on how one can select best SIP or make better mutual fund portfolio. I am publishing it as it is – Just added performance Tables that may interest you.

Guidelines for Choosing Best Mutual Fund for SIP

While going through the comments of readers on the posts I have observed that most of the readers are asking the same questions again and again. The most common question is regarding the best equity mutual funds available SIP. Although you have answered this question many times, the investors seem to be confused. Hence I think it will be a good idea if some broad guidelines are given. Accordingly, I have prepared some guidelines. You can go through these and see if these can be shared.

Broadly, equity mutual funds can be classified as follows:

Equity Large Cap Mutual Funds

DSPBR Top 100 Equity

ICICI Prudential Focused Bluechip Equity

Franklin India Bluechip

LargeCap Funds

1m

3m

6m

1yr

3yr

5yr

10yr

DSP BlackRock Top 100 Equity

5.61

-1.94

0.08

6.40

16.11

18.78

Franklin India Bluechip

2.95

-3.43

-0.82

6.69

18.64

16.78

27.06

ICICI Prudential Focused Bluechip Equity

5.55

-3.50

0.98

10.63

21.35

Category Average

5.53

-4.11

-2.10

4.00

11.05

12.19

18.45

Equity Large and Midcap Mutual Funds

Fidelity India Growth

HDFC Top 200

ICICI Prudential Dynamic

LargeCap & MidCap Funds

1m

3m

6m

1yr

3yr

5yr

10yr

Fidelity India Growth

5.42

-3.52

-1.21

4.88

19.13

HDFC Top 200

4.37

-3.40

0.15

6.48

21.55

20.25

31.77

ICICI Prudential Dynamic Ret

4.80

-1.92

0.61

7.22

18.15

18.67

Category Average

4.88

-2.95

-1.63

2.42

12.17

12.25

21.25

Equity Mid and Small Cap Mutual Funds

HDFC Midcap Opportunities

Birla Sunlife Pure Value

IDFC Premier Equity

MidCap & SmallCap Funds

1m

3m

6m

1yr

3yr

5yr

10yr

Birla Sun Life Pure Value

4.37

-0.65

2.72

-1.25

24.95

HDFC Mid Cap Opportunities

6.43

6.49

9.05

13.38

26.29

IDFC Premier Equity Plan A

7.19

1.55

4.85

7.98

23.32

29.33

Category Average

5.99

0.18

0.97

0.38

13.29

12.10

24.71

Equity Multi Cap Mutual Funds

HDFC Equity

Quantum Long Term Equity

Reliance Equity Opportunities

MultiCap Funds

1m

3m

6m

1yr

3yr

5yr

10yr

HDFC Equity

3.97

-2.97

0.55

7.82

25.09

20.33

32.89

Quantum Long Term Equity

4.03

-3.86

-2.58

5.53

22.29

18.14

Reliance Equity Opportunities Ret

6.75

1.54

4.28

7.73

25.51

18.96

Category Average

5.12

-2.39

-1.02

1.74

14.43

14.78

25.61

Equity Value Funds

Birla SL Dividend Yield Plus

ICICI Prudential Discovery

UTI Dividend Yield

Equity Sector Funds

Reliance Banking

ICICI Prudential FMCG

UTI Pharma and Healthcare.

Equity Others

UTI MNC Fund

Birla SL India Gen Next

Kotak Lifestyle Fund

One more way to check is best mutual funds consistent

Core & Satellite Approach of Making Mutual Fund Portfolio

While selecting the funds from the above mentioned list Core and Satellite approach has to be adopted. The core of the portfolio will consist of comparatively safe Large and Large and Midcap Funds. The satellite component will have funds from the other above categories. Satellite will have comparatively risky funds. While core provides stability to the portfolio satellite gives potential for high returns. Allocation between the two components depends on the risk appetite of the investor. Conservative investor will have larger allocation in the core and aggressive investor will tilt the balance towards satellite.

Diversification in SIP Mutual Fund Portfolio

A portfolio should have a minimum of two funds and a maximum of five to seven funds. This is needed for the purpose of diversification. Also while selecting the funds not more than one should be selected from the same group. Diversification across fund houses is also needed. Keep only one fund from a particular fund house in the portfolio. A typical portfolio will have one fund each from Large Cap, Largecap and Midcap, Multicap, Mid and Smallcap. One or two funds from other groups can be included in the portfolio if required.

My Views

First of all thanks a lot to Anil who has taken out time & wrote this master piece for fellow readers. I have seen his comments on various posts & 80-90% of our views match so there was no reason that I have not published this. I think this article will be really helpful for the people who are having “best mutual fund for sip” question in their mind + few tips on diversification will also help you to reduce some unsystematic risk. As couple of days back we discussed selection of the fund is not the most important factor in your investment success. (Read Secret of Achieving high returns) So even if you stick with points that are shared by Anil – you still will be doing better than most of the investors.

But still there is a lot of scope to reduce risk in once portfolio. Even in selection of fund risk should be given an equal weightage to returns if not more. How my performance table would have looked if I was comparing these funds.

Funds

Alpha

Beta

Downside Risk

Info
Ratio Rel.

Jensen’s
Alpha

Max
Drawdown

r2

Sharpe

Sortino

Treynor

Standard Deviation

Birla Sun Life Pure Value

13.73

0.81

6.92

1.12

12.71

-25.72

0.94

0.71

2.90

24.71

28.31

DSP BlackRock Top 100 Equity

5.47

0.90

5.81

0.91

4.93

-27.78

0.97

0.49

2.03

13.15

24.14

Fidelity India Growth

6.18

1.00

7.69

1.68

6.16

-34.30

0.98

0.52

1.84

14.25

27.07

Franklin India Bluechip

7.82

0.97

6.81

1.42

7.67

-32.62

0.96

0.57

2.21

15.45

26.38

HDFC Equity

9.13

1.06

9.09

1.78

9.45

-38.23

0.97

0.64

2.23

19.09

31.70

HDFC Mid Cap Opportunities

13.08

0.86

9.14

1.70

12.30

-37.87

0.97

0.67

2.14

22.84

29.46

HDFC Top 200

8.52

1.06

7.75

2.02

8.86

-34.71

0.98

0.60

2.26

16.45

29.00

ICICI Prudential Dynamic

6.62

0.92

6.76

0.86

6.18

-35.64

0.94

0.53

2.01

14.84

25.48

ICICI Prudential Focused Bluechip

10.03

0.97

6.72

2.97

9.87

-29.97

0.98

0.67

2.61

18.04

26.04

IDFC Premier Equity Plan A

10.06

0.87

8.87

1.32

9.35

-38.12

0.96

0.54

1.84

18.76

29.90

Quantum Long Term Equity

8.50

0.96

7.58

1.60

8.27

-36.11

0.97

0.64

2.40

19.05

28.60

Reliance Equity Opportunities Ret

9.11

1.08

8.78

1.74

9.53

-38.46

0.97

0.63

2.32

18.87

32.28

I have removed half of the columns to keep it bit simple. I have also not divided it in types of funds because I just wanted to share what an advisor looks into before selecting a fund – there are many other variables which are considered before suggesting a fund. For this table I have chosen 3 years data as few of the funds in the list have not completed 5 years.

In case you have some questions regarding mutual Funds or SIP feel free to ask. Also share this with your funds who are confused about choosing best mutual funds.

Disclaimer: This post represents the opinion of its author only, and does not necessarily reflect the opinions of the author’s employer, The Financial Literates or the other authors who write content for this Website.

Hi Hemant
Thanks! You have considerably increased the utility of this post by adding tables and your views.Initially I was also thinking of adding some tables but I found it too difficult to handle.Moreover , I was sure that you will definitely add your valuable input.Hopefully, we will now have less questions from the readers on this topic.

Thanks Anil and Hemant for putting with such a useful article. This should solve many people’s issue on how to select a mutual fund for SIP.

Along with that, if investors want to get deep information on a particular fund.. for eg : percentage of investment done in large cap, midcap, small cap by a particular fund or in which companies the fund invests and who is the fund manager and to check the record of that particular fund over the years, we can find all that information in the mutual fund India website.

Ya Mayank,
If someone turns these percentage in rupee term it looks ever bigger – for example if 10 years back someone would have invested Rs 1 Lakh in Large & Mid Cap Category (cagr 21.25%) – current value Rs 6.87 Lakh. If he would have invested at the rate of 10% (in 2001 GOI 10 year bond yield was close to 10%) – current value Rs 2.59 Lakh. This gap will be increasing with every passing year.

very useful article indeed , thanks Anil kumar and Hemant Bhai .I was searching in net for a long time to find the good funds and this article will help me to prepare my portfolio . I’am little bit late to start my investments as i have to finish my father’s housing loan and my sister’s marriage.Now there is no more liabilities and I’am planing to invest 1000 monthly in 7 funds for 15-20 years. Almost selected 9 funds,but it’s still hard to select two from HDFC Equity,HDFC Top 200,HDFC Midcap opportunities and HDFC Prudence.Can anyone help to select two from this ?

Hi Shamshad
It is never too late. Better late then never.It is good to learn that after discharging your family responsibilities you have now decided to invest in equity mutual funds to meet your long term goals.As already mentioned in the post if you are a conservative investor you should have higher allocation in core of your portfolio which will have large cap and large cap and midcap funds.If you are agressive investor you can give more exposure to midcap and multicap funds.So basically the choice of the fund from HDFC Mutual fund house will depend on your risk appetite.However do not select more than one fund from HDFC Fund House.Nine funds are really not needed.Seven is the limit.

Thanks for your suggestions,It’s always a nice feeling that there is lot of people to help in this site,that too within no time.I’am 27 years old and by God’s grace there is no more financial liabilities for me.So i wont mind being an aggressive investor. By the time i didn’t mean that,I’am going to invest in 9 funds Anil bhai – i just mean i want to invest in 7 funds and for that i have already selected five and wanna select 2 more from 4 HDFC funds.You people are very much experienced and have a good knowledge in this field.So i will value your words and will make my selections according to that.

Hi Shamshad
It is good to know that you do not have any more financial liabilities.Since you are quite young, you can afford to be aggressive and plan for your long time goals.I really do not know why you are particular about having seven funds in your portfolio.Even five or six would have been Ok. If seven is your lucky number and you want to stick to it and you also want two funds from HDFC fund house you can select HDFC Top 200 and HDFC Midcap opportunities.HDFC Top 200 will be part of your core and HDFC Mid Cap opportunities of satellite.
However it is important that you must keep track of your portfolio so that you can get out of any non performing fund before it is too late.Good luck!

Thanks for your kind advises .I’am not particular about investing in seven funds,as i can invest 7000 monthly,i just think to invest 1000 each in seven funds.that’s all. But now listening to all your advises , i’am thinking to reduce it to 5 or 6.HDFC funds are not my favorite but these funds are among the top three of their own categories.

I will keep track track of my port folio and hope you people will be here to help us.

Hi Shamshad
I would like to clarify that it is not at all necessary for you to invest equally in all the funds.In fact, some mutual fund houses have fixed the minimum amount which you must invest.For example minimum investment in IDFC Premier equity is Rs 2000/- per month.Moreover to have proper balance between core and satellite you will have to probably put more money in two large and large and midcap funds of your portfolio.

Ideally in a portfolio we should not have more than 4-5 funds. 7 funds I think is one too many.. Although the HDFC funds you mentioned are all very good and exceptional performers over the years, it is still a huge risk to invest in 4 HFDC funds in a portfolio.

As mentioned by Anil n Hemant, we need to divide our portfolio in large cap, multi cap and mid n small caps. So if you want to select funds accordingly then here are few examples :

I think people spend way too much time into worrying about the ‘best’ mutual fund.

Investing has to be done with a goal. A goal implies an estimate of corpus needed is known and a rough and reasonable estimate of rate of interest needed is also assumed. For any such practical calculation easily the top 15-20 equity MFs will quality. Then we select based on downside protection, past performance and level of fluctuation. Even then it can be narrowed down to only 10.

The way I see it, investing in any of the ‘top’ 10 (even 15) funds with constant monitoring should be okay for most long term goals. Of course as you pointed out large caps should form the core with some mid-cap funds depending on risk appetite.

My points is too much time is wasted by many in wanting to know the best MF leading to inaction and investment paralysis.
I recently read that the bottom most MF (from Taurus) outperformed bank fds in the long term.

So get started and learn on the fly instead of waiting for someone to advice you on the best fund or the method to choose it.

Hi Pattu,
Agree with most of your thoughts but do you know even after publishing this article I got many queries starting with “can you suggest me few funds”. Anil’s thought behind writing this was that it will reduce such type of queries but I think this will not work.

Hi Hemant
Yes , you are right, I thought I had made the concept of diversification and core and satellite approach very clear in the post but we are still getting the same type of queries and the investors are making same type of mistakes while selecting funds for their portfolios.Although you have also made these concepts very clear in your various posts, I am thinking of writing again on the common mistakes which the investors make while selecting equity mutual funds for SIPs.

Good article specially to see my 6 sip’s and in your reccomended list :).

My only comment is on the number of funds you to hold. Few years back when i first started my investment in funds i went with 12. soon i found the it was too much then rebalance it to 10. A year later again i felt that was too much and reduced to 8. This year i again felt it was too much and then reduced it to 6 and started again to add on SIP which was stopped in between. Frankly now i have already started to feel that 6 is too much and may be i need to reduce the same to 5 or even 4. It’s only a matter of confidance in your goals and funds that you need, to bring down the number of funds you hold – which will defenitely improves your returns rather than over diversification.

Hi Shinu
The number of funds you hold in your portfolio is basically decided to have proper diversification. There should be neither under diversification nor over diversification.Decide about the funds before starting SIPs so that you do not have to stop the SIPs later on.

Hi Pattu
It is not necessary to have different equity mutual funds for different goals.You can always keep different allocations in the same funds for achieving different goals.In any case you have to gradually move away from equity to debt as you approach your goals.

Hi Pattu
The key is to keep tracking your funds so that you can take corrective action before it is too late.One should not stay invested in a nonperforming fund for so long that it can adversely affect your long term goals.

Yes I know that. But the diversification I seek is for different goals and not for the same one.

Say one has 3 goals with obviously 3 different corpuses and deadlines. The idea of using the same 4 funds for all them does not appeal to me. Its a bit like putting all eggs in only a few baskets. Besides the role/importance of the fund manager is a little scary. What if one of them behaves like the Oslo gunman!? They are human after all and not beyond resignation, non-performance and death!

I would prefer 3 separate core and satellite MFs for each of my goals. Of course its more work managing but I don’t mind. Compartmentalizing my goals to me promotes discipline in corpus building.

I only estimate 9/10% returns from my equity MFs so if a 15% fund falls to 12% I still wont break a sweat. For the same reason I am not too worried about loss in performance because of this ‘over-diversification’.

Hi Pattu
Here I would like to tell you something about Behavioural Finance.Although Hemant has covered this topic in one of his posts I would like to reiterate some of its important points for your benefit.It attempts to explain the irrational behaviour of persons with respect to their financial decisions.In the world of investing, rigidity or inherent stubbornness, can lead to losses and below optimum returns.When an investors mind is fixated on something, logical reasoning takes a back seat and he takes decisions based on incomplete information.Then there is mental accounting which again leads to a loss.People have a tendency to filter information and pay attention to only that part which confirms their personal opinion and try to influence others with their ideas.

Not sure whether to be amused or to take offense. Will go with the former emotion since I fail to see the relevance of your comment. Perhaps it all part of irrational behavioral finance!

I have made several mistakes in all aspects of my life and I am sure many more are waiting in the wings. I am more than happy to correct myself. But to so I will require concrete reasons and not psychology.

The general observations provided for my benefit is true for the laymen and the finance professional alike.

Personal finance is way too personal and hence diverse to be narrowed down to a set of rules taught over a few months to create financial planners.

I value real experience (like that of Shinu below if he provides more details) over a degree or a certificate.

Hi Pattu
It appears to me that you have not carefully gone through all the posts of Hemant.For your benefit I would like to reproduce what he has said in a recent post.

Monthly Contest – Comment & Win
JULY 18, 2011
I believe that learning can happen through interaction & if we talk about TFL – this could be done in the comments. This is why every comment on this blog receives a reply from me. (may be sometime bit late) But unfortunately, I have observed that most of the times “People don’t look for advice… they only search for someone to agree with them” If your views are same as above quote then you are at wrong place.

Hi Pattu/Anil,
You won’t believe when Pattu added his first comment on this post – I told my colleague there will be hot discussion bw Anil & Pattu. Why I felt that – bcoz I think I know both of you a little bit & also know something about human behavior.
So stop arguing & start doing some constructive discussion which will be helpful for others.

“Say one has 3 goals with obviously 3 different corpuses and deadlines. The idea of using the same 4 funds for all them does not appeal to me.”

The above is a totally wrong approch i believe. You can have 10 goals and have 10 time line. You should determine the rate at which your “portfolio” to grow to ensure your goals are achieved with the investment you are committing. Now this portfolio can be of just 4 mutual fund (IF YOU ARE CONFIDENT YOU SELECTED THE RIGHT FUNDS FOR YOUR PORTFOLIO AND CAN GIVE YOU THE RETURN YOU ARE LOOKING FOR) and just have to withdraw the right amount in the right time to ensure your goals are met. I am personally a victim of overdiversification and not meeting the right return. i hope i will be better of in future with my rebancing of my portfolio.

Thank you for your concerned comment. Can you provide me an example of how over diversification affected returns in your case if possible? Unless I see numbers and the context and if the example is of relevance to my situation, I don’t see any thing alarmingly wrong with different cores and satellite funds.

The right fund today need not be right fund tomorrow. As of now I am certain that each of the funds I have chosen for each of my goals are ‘right’.
I am not arguing I am correct. I am happy to correct myself, but I would like to see examples with numbers to access the relevance to my case.

Dear anil & hemant
I agree with pattu in many points he has raised.
If one is comfortable, he can have 12 to 15 funds in his portfolio and comfortably manage it with the help/feed back from learned finacial experts like you
Today, like your site , there are other site sharing infomation and also tools for monitoring( as suugessted by you- money sights/money control etc.) which help a lot
So why not take the help of all these and has really diversified portfolio which gives advantage in case of failure/poor performance of one or two funds selected.
i think a healthy discussionin this topic is good for increasing knowledge of all of us

I dont know why you felt mine was a knee-jerk reaction? Maybe got carried away by some other discussions… Anyway no worries. I am still a student in personal finance and is just trying to get it better off now rather than cry over the lost time. So bear with me for any mistakes.

I never said we need no rebalancing of the SIP portfolio. Defenitely i will monitor and anytime i find my target return is not achieved and the same time it is not in the first 10 in the best performing it the catogory I WILL ACT. Please find below a workout for your reference and appreciate comments and corrections.

First thank you for understanding what I wanted to see and for providing a detailed breakup. Please give me a day or two to respond as I am tied up with other things.

You have misunderstood my comment on knee-jerk reaction. What I meant was, I should not suddenly change my portfolio just because someone says I am wrong without proper analysis, which would be a knee-jerk reaction. Was referring to me, not to you.

I think all 3 of u have valid points with different perspective. We can have 4 funds for our all goals n take out the necessary amount from that fund at the time of reaching the goal as Anil n Hemant mentioned which is a good approach..The reason why I dont disagree with Pattu is bcoz he too has a very good point..If we look at the market history, there are at least 15 very good mutual funds which have done well without too much difference in return.So if we can select 3-4 funds for each goal out of those 15 then its also gonna be a good approach..Only think is that one needs to do regular monitoring of the funds. Ideally I dont think a person has more than 3-4 goals on an average..

Thanks a lot Hemant & Anil for making it easier for new investors who want to get into investing. Equity Funds are always the Best option for Long Term Scenarios. It would be really helpful if you can do similar kind of post regarding Debt / Balanced Funds or FMPs for Short Term Scenarios i.e. 1 to 2 years. Many of us need these too in our portfolios. Lastly all the discussion now-a-days is centred towards SIP. Yes its magic. But say one has a SURPLUS Fund of Rs. 2 lacs. What should he do with this money? Should he invest in lump-sum in Mutual Funds or park it in some Liquid Funds or leave it in Bank SB A/c to rot at 4%? How do one take the route of STP? Which are the Funds available? This is very important for new investors in Equity market, who have all been investing in FDs all these years & now these instruments have matured. I think covering these aspects too will almost give the topic an overall complete view. And please include the name of the Funds as done in this post, its really helpful. Thanks & keep educating.

Hi Amit
Investing lump sum in equity mutual funds is not advisable.If you want to take STP route you can park your funds in liquid fund and from there invest in equity mutual fund by giving instructions regarding frequency of transfer.Another method is to park your funds in a flxi fixed deposit which is linked to your savings account.Whenever any amount is withdrawn from the fixed deposit only that much portion of the fixed deposit is broken and the remaining amount continues to earn interest.The advantage of this method is that the money is transferred to equity funds through the SIP route of different fund houses.In the STP route you can not transfer money to mutual fund schemes of other fund houses.Flexi fixed deposit is a good option as the interest rates are quite high now.

where’s ELSS? aren’t there any good enough to be included here? ya there’s DTC coming to kick them out from favorite list but still there’s time left people can utilize this excellent instrument to save tax and build wealth.

Hi Jagbir
This post is for pure equity funds for long term investment.No doubt there are many good ELSS and Hybrid funds which are basically used for short or medium term investment and hence not included in this post.

Hi Kumar
There is no hard and fast rule as for as allocation among different categories of mutual funds is concerned.This mainly depends on the type of investor whether you are conservative or aggressive.Since you have also included balanced funds in portfolio I assume that you are a conservative investor.Balanced funds are normally used by conservative investors for meeting their medium term goals.For long term goals only equity funds are preferable.You can invest around 70% of your funds in Large Cap and Large Cap and Midcap funds which can form core of your portfolio and remaining in other funds which will form satellite.

Apart from BSL dividend plus , other funds are miserably lagging behind. Usually, I try to balance my mutual fund portfolio once in a six months after a through review of mutual fund portfolio. But I am unable to change these funds as there is clause in SIP insure that any change/switch in the SIP or Accumulated units will lead ceasure/closure of insurance cover( which is group insurance – as per Birla sunlife letter).
As you are always telling about beherioval science, our mind doesnot allow logical thinking
Pl enlighten me about is there any merit in continuing these sips in spite of their recent poor performance or it will be better to close and switch to good funds & lose insurance cover WHICH IS SLATED TO BE FOR ANOTHER 10 YEARS.

Hi Kumar
First let me tell you the purpose of investing in equity mutual funds and insurance.Investment in mutual funds is done to meet some long term goals.Insurance is not an investment it is an expense which we have to incur to cover some risk.Since the purpose of two is different we should never mix them.Once we buy a mixed product we completely lose our focus.I really do not understand why you bought this product.Did you have a goal in mind?
Secondly, you must understand that investment in equity mutual funds is a long term investment.In the short term we may have ups and downs in the performance of funds.We have to learn to ignore these.You should not do unnecessary tinkering every six months.
Thirdly, you must never stop SIPs.
Fourthly, There is no proper diversification.You have five funds of two fund houses.
Fifthly, funds should never be selected based on only the recent performance. You have not mentioned which balanced and sector funds you have added.

Yes agreed. what i have given here is the list of funds where SIP INSURE is taken. apart from HDFC PRUDENCE & DSP BALANCED FUNDS, I HAVE OTHER top rated funds (including given in your web site) as mentioned above.

Now you tell me whether i have to stop/switch those SIPs for better funds by discontnuing SIP INSURE only

Hi Kumar
It is clear that you have not given complete information regarding all the funds in your portfolio.From whatever information you have given I can make out that you have too many funds in your portfolio.Please give the details of all the funds you hold.I would also like to know the goals for which you are investing and for how long you have been investing.No sensible advice can be given in the absence of complete facts.

I am worried about these sip insure funds, once i decide about these, i will make a detailed finacial plan and inform you all the list of funds . i hold about 8-10 funds, 3 each in Large, Large & mid cap, 2 each in Multi cap,Small & mid cap

Hi Sidharth
I agree that comments on this article which was meant to help the readers have generated more heat than light.However it has been a blessing in disguise for me as I have got a very good feedback which will motivate me to write something on the common mistakes which the investors make while investing through SIPs.

I really like this article a lot..Its very nice and provides lot of useful information. And now I feel satisfied by my fund selection as the funds that I have selected have good exposure in large caps and mid caps..

My only concern is that I have HDFC tax saver fund which I will continue only till March 2012 as its almost confirm that ELSS funds will not be considered as tax saving funds as per the new DTC. So perhaps I will have to distribute this amount in the above 4 funds. Want to know your views on this Hemant n Anil.

Dear Hemantji,
I had started investing since last 4 years, all in SIP of SBIMF, all equity diversified,
about six month back I got introduced to Fixed maturity instrument but I dont like it, still I like equity, which has given back good return, my question why do anyone needs debt fund when they can put money in fixed deposit which is about 9.25% at present, and the next question is is it necessary to invest in different AMC.

Hi Tony
Investments in debt funds are done to meet your short term goals whereas investments in equity funds are done to meet your long term goals.Here short term means around three years and long term means more than five years.Yes it is preferable to invest in funds of different fund houses to reduce risk.

FMP / Debt Fund have quite a few advantages over traditional FDs. They are much more Tax efficient in case of people who are in Higher Tax Bracket. First lets talk about Short term i.e. less than 1 year – you pay STCG @ your Income Tax Slab. Also if you have chosen Dividend option (I personally don’t like this), Dividend is subject to DDT. So avoid it. Go for Growth option. In case of long term i.e. more than 1 year – one gets the benefit of indexation (2 years even if it is 366 days) in computing LTCG Tax.
So if you are in lower tax bracket, FDs are fine, but if you are in higher tax bracket, FMPs & Debt Funds surely make a lot of sense.

I have heard so much about balancing and rebalancing your MF portfolio at a certain pre-fixed dates. What about hybrid funds? If we select a good hybrid fund like HDFC prudence, will not not do the job for me? If I select 2-3 funds like that, is it not enough? Iam really new to MF and investing. These are just some doubts running through my mind. Can someone clarify how this works differently from whats suggested?

Hi Hema
Investment in equity mutual funds is done basically to meet your long term goals.Your portfolio has to be constructed based on the corpus required by you to meet your goals.If you have to remain invested for more than five years then it is preferable to go for only pure diversified equity funds.However if you are a new investor who can not take much risk and want to remain invested for a medium term only, you can consider investing only in two or three balanced mutual funds.

Thank you Anil ji,
You made me decide to switch AMC now and now I m going to for HDFC Equity and Growth fund, 10000 every month, would you advice me if I need to go for a balance fund instead of two equity?
Thanks again for your advice

Hi Tony
Please read my comment above to Hema.You have to follow core and satellite approach as mentioned above in the post for constructing your portfolio.Please do not invest the entire amount in two funds of the same fund house.You can divide the amount between two fund houses.

70% of the monthly SIP was between SBI Magnum and HDFC Tax saver.
I use to read about the fund Managers, the companies they are holding etc etc. I liked Sandeep Shabarwal. My biggest mistake was Following the fund Manger rather than process.

When Sandeep Shabarwal moved to JM, i brought JM mutul fund Tax gain. This was more of bet on fund manager inspite of knowing that JM is not good fund management company. This back fired badly. i invested around 30 k at NAV around 8rs.

Lesson i learnt : Respect the process not the individual. HDFC and SBI do have robust process are not not dependent on individual.

Note : Last year i just put money in PPF. for timebieng i have discontinued the SIP in ELSS as i am not sure how DTC will have impact on ELSS.

Thanks for the comprehensive article.. Well done.. I would like it If you could write an article on explanation of the various terms and how to apply that knowledge in selecting a fund once we have shortlisted them down to 3 in each category.. Sometimes I feel that past performance may not be indicative enough.. Are the star ratings also based on such analyses?

One more thing, how often must one review the funds they have in their portfolio? And what factors must exactly be taken into account? I mean, if a fund has dropped from 1st place to 3rd or 4th place (about 2% drop in return compared to its peers), should we just drop it, or should we be patient and wait?

I have recently started investing in MFs by SIP, and believe me, I spent a lot of time reading all articles, going through websites, asking advice, etc before shortlisting them.. But somehow I still dont feel confident with my decision.. Since I have opted for a 12 month SIP period I dont think I will be modifying anything until next May.. These are my MFs and I am a young aggressive investor with medium to long term goals.. I have kept a Balanced fund for any short term needs like vacation, pleasure spending, etc..

Hi Sunnydoc
For short term goals you should invest in debt,for medium term in balanced funds and for long term in equity mutual funds.Here short term stands for up to three years,medium term from three to five years and long term for more than five years.I notice that you have opted for SIP period of only three months which is very small for investing in equity mutual funds. You must give your funds at least one year before you start evaluating their performance.You have selected a good aggressive portfolio.Don’t stop your SIPs after one year and remain invested as long as possible.

Thanks for the feedback Anil.. I have invested in these SIPs since May and intend to continue them for as long as possible, with yearly re-evaluations and rebalancing if necessary.. HDFC Prudence I have kept for my medium term goals..

In addition to this I have parked about 3 lakhs in my savings bank account with sweep in sweep out FD options for emergency funds and short term goals.. In addition to this I deposit money for PPF to take care of the debt part of my portfolio even though it is a long term block..My next plan is to purchase a good pure term plan and a health insurance with adequate cover..

I could plan things like this only due to such excellent blogs.. Please continue the good work.. I would like to know how to analyze the performance of mutual funds apart from the tables that show returns.. Perhaps a simplified explanation of the terms would make for a nice article..

Hi Hemant,
Your article indicates various financial ratios. I was wondering how is ‘Downside Risk’ calculated and more importantly how does one corelate so many ratios to determine good fund.
Another questions, what is the duration over which the ratios for various funds have been calculated – is it fund’s life time or is it last few years. If later then how many years.

Hi ,
hemant Its a really a good articles .I really like this article a lot..Its very nice and provides useful information. you provide sector wise best allocation in to large,mid,multi cap investment depend upon the client need and his rick appraises .Now a days i concentration on client portfolio revaluation and assr allocation on periodic time.

Hello I need advice for one of my friends. I think he has got far too many funds. Please advice which ones to scrap, which ones to hold, which ones to continue (for SIP) & new additions to be made. I would have tried it myself, but it looks too clumsy to me. So over to you eXperts.

Hi Amit
SIP is the best route to invest in equity mutual funds.Lump sum investment is not the correct approach.It is not clear whether lock in period in tax savers is over or not.There is investment in three Reliance funds which is again not correct.He can exit from two Reliance funds.The portfolio must be constructed based on the core and satellite approach mentioned in the post.The present portfolio does not appear to have any focus.

Yes I told him same. No, the ELSS Funds have not completed 3 years. So he can’t do anything about those. For this year I think I should advice him for HDFC Tax Saver. Please advice which Funds should be scrapped. Would it be prudent to hold BSL FL Equity & Reliance Growth?

hi,
this article is very useful for me. but i am confused and have a small question. i have SIPs of 9 funds (Rs.22000) in my portfolio.
HDFC Top 200 – 9000
HDFC Midcap Opportunities-2000
BSL Frontline equity – 4000
BSL Dividend yield – 2000
DSP-BR Top 100 – 1000
DSP-BR Equity – 1000
RELIANCE Growth-Growth – 1000
RELIANCE Regular Saving – 1000
RELIANCE Diversified Power – 1000
i want to drop 2-3 funds from this list (rel div power, rel growth, dspbr equity) and add the money to top 100. but i’m not sure it will be a good idea. i am investing for last 2 yrs. (with a minimum 10% pa bump up.) i have 12-13 yrs. to fulfill my goals. if you kindly suggest me something it will be very helpful. thank you..

Hi Subhajit
Except for one or two funds other funds in your portfolio are quite good.Your decision is correct.You can get out of the funds mentioned in brackets and increase your SIP in DSPBR Top 100 to Rs 4000.

Hi Shamshad
What I have learnt from papers is that 10000 is the annual investment amount.So even if you start a new SIP of Rs 1000 per month the amount is going to be recovered from your initial two or three installments.The way to avoid this is to do direct investments against your existing folios and clearly mention in your transaction slip that this is a direct investment.

No clear guidelines by SEBI yet. Its a rubbish move, just creating confusion in the minds of the investors, and will lead only to delayed financial decisions. You can look at the following blog entry by Mr. Subra on his blog. I love his sarcasm.

1. What is the maximum tenure one can get a SIP registered for? Or nothing of this sort exist.
2. If I have registered a period of say 5 years at the time of initial application, but now want to extend the period, what’s the procedure? Are any charges applicable for the same?
3. I have, say a Rs. 1000/- SIP in a Mutual Fund Scheme. What I need to do to increase it to say Rs. 2000/- after say, 6 months? Will I have to start a new SIP in the same fund i.e. I will have 2×1000/- SIPs or 1×2000/- SIP?
4. Does there exist any option with Fund Houses to increase / decrease SIP Amount in a few particular months when Market is relatively down / up.

Hi Amit
There is no maximum tenure for SIP.You can select the time as per your requirement.
If you want to extend the period of the SIP the best thing to do would be to start another SIP.This way you can select another date also for your SIP.No charges are applicable.Moreover you have the option of increasing or decreasing the amount.
Timing the market is not advisable.

Its about time now that we need to thank Hemant again because I just saw the news today that Speak Asia has been caught as one of the biggest scams ever. Some of the people have been arrested and some officers have ran to dubai. Over 12 lacks people have invested in Speak Asia. Hemant has already written an article on this few months back on how speak Asia operates and he warned against investing in such schemes.

I have just started (this month) four SIPs of Rs.1000/- each /month for a period of 10 years in HDFC Top 200, HDFC Equity,HDFC Mid Cap Opp and HDFC Prudence ( Prudence:- will review and exit on or before 3 years).

Please suggest 3 more aggressive equity funds in which i can stay invested for a period of 6 to 10years
OR should i just add 1000 rupees each in HDFC Top 200 and HDFC Equity and HDFC Mid Cap Opp?

Hi Biju
All the funds which you have selected for your portfolio are very good.Also HDFC Mutual Fund is one of the best fund houses with a lot of highly performing schemes.But your approach to construction of the portfolio is not correct as there is no diversification across the fund houses.As mentioned in the post, you must not have more than one fund from the same fund house in your portfolio.By placing all your eggs in one basket you are taking a huge risk.Hence my advice would be that you must select one large cap fund,one large cap and midcap fund and one multicap fund from the categories given in the post for your additional investment.But see that all the funds should be from different fund houses other than HDFC Mutual Fund.

Appreciate your sincere efforts. I have praised you guys earlier as well so will not just make the comment bulky, you are truly mentoring many of the people like me who were not very friendly with financial management. Keep the good work going & also plz let us know whenever we can be of any assist to you.

Hi Dinesh
Thanks for your appreciation. You can select one large cap and one midcap and small cap from the list of funds given in the post for your additional investment. After you quit tax saver funds you can shift that amount also to large cap and large cap and mid cap funds of your portfolio.

Thank you so much ANIL. I will go with either IDFC Equity or Franklin India Bluechip.

I am thinking of putting some money directly into equities ( I mean buying some shares of bluechip comp) and then keeping it aside for 3-4 yrs since one of my recurring will be maturing this SEP & I will have 40K in hand. Do you think that can be a wise option?

Hi Dinesh
I think you can put Rs2000/- in IDFC Premier Equity and Rs 1000/- in Franklin India Blue Chip. Instead of putting Rs 40,000 directly into equities the better option will be to divide the amount and put it among the mutual funds in your portfolio.

Hi Deepak
Most of the funds in your portfolio are quite good.You have indicated a dozen funds in your list and you say that you have also invested ion some balanced funds.You really do not need so many funds in your portfolio. Your portfolio has diversification in numbers but not in style.Moreover you have four funds from the same fund house.This makes your portfolio risky.Normally in your portfolio you should have only one fund from one fund house.My advice to you will be to construct a portfolio based on core and satellite approach as mentioned in the post.Limit the funds in your portfolio to maximum of seven.Keep three funds from large cap and large and midcap space in core and remaining in satellite.

Hello Dearest Hemant & Anil!!!
I have created these two portfolios. Which ones is better or are they both equally good? Actually is the first one is for a person aged 27 years (Aggressive) & the second one is for a person aged 56 years (conservative). Debt is taken care of through PF, PPF, NSC & Bank FDs. I think the first one has 1 or 2 Extra Funds, which ones would you prune, given a choice? So your opinion. Thank You.

Hi Amit
Both the portfolios created by you are very good.However my personal preference is for the second portfolio.The reasons are as follows.
The number of funds are less.
In the first portfolio you have chosen two funds from HDFC Mutual Fund whereas in the second you have chosen only one.
Moreover even second portfolio can be used by aggressive investor just by increasing allocation to multicaps and mid and small caps.
You are doing fine.Keep it up.

I used the Mutual fund meter . In the returns calculator from [Aug2002 to Aug2011] it is showing the CAGR of Absolute Returns 1206.5% of HDFC top 200 fund.

Iam calculating my net amount would be this
if i invested Rs 50000 in Aug2002 in HDFC TOP 200 fund then today my amount is 50000 * 1206.5 /100 = 603250 + invested amount (50000)
it is 653250 Iam calculating right or some mistake is there correct me plz.

Hi Anil n Hemant……i had been luking fr an exprt advise fr quite some time now to discipline my investments which i think i have made mess fr myself over the last 4-5 yrs.i was totally dependent on my lic agent and new vry less abt financial discipline….plz help me……these are my present so called investmnts…..2 regular lic policies of 2 lac each for my two kids…….rs 10,000in lic market plus…..50,000/=in lic endowment plus (growth fund)….1 lac in lic samridhi plus……85,000/=in lic endowment plus (growth fund)……..thank you vry much nd luking fr ur reply sir.

Hi…Anil…..
thanks fr the reply…..what about the other investments w.r.t the LIC funds presently taken by me and also plz suggest me some mutul funds atleast 4 to 5 for investments through SIP mode which may amount to 5000 to 6000/=

Hi Malik A N
To meet your long term goals you have to construct a portfolio as outlined in the post.Adopt a core and satellite approach.In your core you can have one large cap fund and one large cap and midcap fund.In satellite you can have one multicap fund and one midcap and one small cap fund.You can select the funds from the list given in the post under different categories.Please ensure that you select only one fund from a fund house in your portfolio.

HI ..Anil…..
thanks for the reply…..but u didnt answer my question which was related to my investments in diff.LIC policies,what should i do with them now……?and also plz suggest if i hav to invest 2 to 3 lacs for 7 to 8 yrs,where it should it be invested…..thanks vry much……….luking forward to ur reply…..

If you are looking to invest 2-3 lakhs for 7-8 years then as per the list you can select the funds mentioned by Hemant and Anil. For this you need to invest Rs. 4000 per month in mutual funds. You can distribute your amount in these 3 funds which will provide you proper diversification.

Hi Malik A N
I think I already answered your question when I mentioned that insurance is not an investment.Here I would like to add that insurance is an expense but it is very much needed for risk cover.
It is not very clear whether you want to invest 2 to 3 lacs immediately or over a period of seven to eight years.Normally, SIP is the best approach to invest in equity mutual funds over a long period of time.The moment you invest lump sum you become hostage of market timing.I would not advise you to invest lump sum when the sensex is at 21000 but you can certainly invest some amount in lump sum when the sensex is at around 17000.Since market is in the correction mode perhaps some lump sum investment can be done now.

Hi Malik A N
First of all I would like to inform you that all mutual fund investments are subject to market risks.Normally you should expect around 12% annual returns provided you remain invested for a very long time.In the short term it is quite possible that your returns may even be negative.It is important that you should have risk appetite before you consider any investment in mutual funds.As I have already mentioned once you invest at one go you become a hostage of market timing.Hence I would not advise you to invest the entire amount at one go.Small lump sum investments can be done whenever the market corrects.
The first job for you is to construct your portfolio by selecting three or four funds as mentioned in the post and start investing in them in a systematic manner every month.You can consider the same funds for lump sum investments also.

Hi Anil….
is this the right time for investments in the mutual funds,while we are watching market crashing these days.and also can we start investing in 4 to 5 MFs by initially depositing atleast 20 to 30,000 in each fund and then following monthly mode for the said funds……thanks
luking for ur reply.

Hi Malik A N
I think if you read the post carefully you will get answers of all the questions.I am again repeating that while constructing your portfolio you should have core and satellite approach.Core will have large cap and large and midcap funds and satellite will have other type of funds including gold fund.How much to have in core will depend on your risk appetite.If your risk appetite is low core will form 70 to 80% of your portfolio.You should not have more than 10% exposure to gold.

Hi Malik A N
For proper diversification it is not advisable to have more than one fund from a fund house in your portfolio. Moreover ICICI Prudential has only recently launched their gold fund. BSL Midcap is a nonperforming fund. There are many better performing midcap funds from other fund house.

If you want to invest 2 to 3 lacs immediately, i suggest you to invest in good debt/income fund and do STP- systamatic transfer plan for rs 5000/- to rs 7000/- a month to a diversified fund according to your asset allocation/need

thanks for your advise.i want top ask you which is the best performing fund amongst
— KOTAK GOLD and RELIANCE GOLD FUND.
–also plz tell me if a fund doesnt perform as per my xpectations do i need to reedeem it or i shud transfer the same deposited money in to some other fund .
thanks bhy.
malik a n
J& k.

Hi Malik A N
Both the gold funds mentioned by you invest in their gold ETFs. The performance of these funds depends on the price of gold and will be similar.You have only to see which fund has lower charges. Quantum Gold Savings Fund has the lowest charges and you can consider that fund.
If you find that a fund is not performing and you want to invest in the fund of some other fund house then you have to redeem the units of the existing fund. However if you want to invest in some other fund of the same fund house then you can consider switching option.

i am really great full to you gentleman for just educating me, making me aware so that i can handle my finances better and i am really sure that you would have made many more people like what i am today,confident and can ask questions to the so called financial advisers .

thanks again.

also kindly tell me which is the better performing fund HDFC TOP 200 or HDFC MID CAP OPPURTUNITIES.

Hi Malik A N
You already have a very good portfolio. HDFC Midcap Opportunities is no doubt a very good fund. If you want to invest in this fund you will have to replace HDFC Top 200 with a similar fund from some other fund house. Both these funds from HDFC Mutual are very good but you can not compare apples with oranges as these funds belong to different categories. HDFC Top 200 is a conservative large and midcap fund whereas HDFC Midcap opportunities is an aggressive midcap fund. Both have different purpose in a portfolio.

Hi Malik A N
I think you had told me that you had finalised your portfolio I am surprised that you are still undecided. I would suggest that instead of taking advice from so many people you should rely on your own wisdom. As already mentioned your portfolio is good and there is no need to do any tinkering with it. It seems that advice from so many sources is only adding to your confusion and not helping you.

you are absolutely right but at the same time being a new investor and that too a layman in financial management i was very apprehensive in my fund selection.In jammu (J&K) i dont have as many options (fund Houses) as any other person like me could have in rest of the country.i had decided and accordingly selected funds after going through your article and with your valuable advice as well but when i approached ICICI bank adviser with the above selected portfolio he asked me it has to be like this and for that he gave certain reasons and accordingly i was convinced and now i have started SIPs since yesterday.Now my final portfolio is as under……

I have excessive amount in my savings bank account as an emergency fund. I know that it is important to have emergency fund but I think I have a bit too much.. so I may or may not need that amount in the next 1 or 1 n half years time. hence I want to invest that bit too much amount in some other debt or hybrid mutual fund schemes where there is not much risk factor and I can take that amount any time if I require. So I m a bit confused whether to go for an FD or go with debt or hybrid schemes like Reliance MIP plan(Growth) where 80 % invest in debt n 20% equity or go with purely debt scheme like Birls SL dynamic bond fund. Or I appreciate if you can suggest any other fund where there is hardly any risk..

Hi Manoj
For short term investment up to three years go for debt.
For medium term investment of three to five years go for hybrid funds.
For long term investment of more than five years go for equity funds.
Since you want to invest only for around one year the best option for you is to go for fixed deposit.Moreover you will get good interest also.Since you are taking this amount from your emergency fund, the best option will be to go for a flexi fixed deposit.This deposit is linked to your savings deposit and has sweep in and sweep out facility.So whenever you need cash you can take it without breaking your fixed deposit for the entire amount.

Hi Samir
I have already mentioned that the funds you have selected are quite good and can form part of your portfolio.If you want you can add one multicap fund from the list given in the post.Hybrid funds are basically a mixture of debt and equity.I had suggested hybrid funds since you wanted some exposure to debt in your portfolio.

Hi Samir,
These products are based on value averaging concept – which is a good concept & sometimes looks even better than rupee cost averaging(SIP). First value averaging is not used in best shape in India – value averaging says when market is going down add more amount & when market is going up there should be provision to redeem amount. Adding more units is available in many systems but no one talks about redeeming amount. Second in case of a sharp fall you need to add lot of money – say you are running a 4 thousand per month SIP & next month they may ask you to add Rs 15000 which is not practical for everyone. Value averaging is also not helpful in secular bull runs. So when we will see the calculations on paper it may look amazing but I think SIP with combination of asset allocation will be a better option.

Hi Muish
You can refer to the fact sheet to find out the capitalisation of the fund.Typically a large cap fund will have 70 to 80% Lcap, a midcap fund will have 20 to 45% Lcap and a multicap fund will have 40 to 70% Lcap.

I am first time investor, can invest up to Rs. 10000/-pm.
I selected following funds for investment.
DSPBR Top 100 Equity – Rs.2000/-
Fidelity Equity fund- Rs.2000/-
HDFC Top 200 Rs.2000/-
IDFC Premier Equity Rs.2000/-
Reliance Equity Opportunities Rs.2000/-
Please comment & suggest some modifications if any for my long term goals.(10 yrs from now).

Hello Dear Anil & Hemant! Please help me decide about a good multi-cap fund. I thought HDFC Equity was a good option but I already have HDFC Top 200. You advice not to have 2 funds from same fund house. So kindly advice. Regarding Reliance Equity Opportunities, I have heard mix reactions. It seems to be a very very risky fund. Would it be prudent to go for the same?
PS: Happy RakshaBandhan to all TFL students & professors!!!

Hi Amit
Reliance Equity Opportunities fund is OK.In general multicap funds are riskier than large cap funds.Moreover it is not possible to predict the future performance of any fund based on its past performance.That is why tracking of all funds in your portfolio after starting investment is important.

Now HDFC Mutual Fund & also Birla Sun Life Mutual Fund allows us to invest online through two modes – one which requires PIN & other which doesn’t require the same. Can you please differentiate the two processes or are they similar?

hi my monthly income 30000
my family present expanse 10000
my investment in lic policy 48000 per year including pension plus
in pf 2000 month
have sip in sbi msfu contra 1000/month
dsp BR top 25 EQ 1000/month
hdfc top 2oo 1000/month
icici dyanamic 1000/ month
now should i continue same or i need to coreect it and revise my portfolio

Hi Hemant and Anil,
I am 32 years old and want to stay invested in equity diversified mutual funds for a long time and want to invest 35k per month via SIP.I have gone through this very nice article and I want to invest 70% in large and large mid cap(core) and 30% in mid and small cap and multi cap(satetllite).The funds and the allocation are as follows:

Please let me know if the above is fine and also can you please help me clarify my doubts over the few things below:

1. Can I be bit more aggressive and invest 60% in large and large & mid cap(core) and 40% in mid and samll cap and multi cap(satellite)? Then the invetsments can be 10500,10500,7000 and 7000 respectively for the above funds.
2.I can start this SIPs for 12 months and depending upon the performance will either continue or stop these funds at the end of this 1 year period . Should I think of selling those funds that time only in case I want to discontinue them due to the permormance?

Hi Hrishi
The portfolio constructed by you is very good.
The allocation between core and satellite is decided basically by your risk appetite.If you have a risk appetite then you can tilt your balance towards satellite.
I want to stress here that when you start investing in equity mutual funds your time horizon should be more than five years.Starting SIPs for only 12 months does not make any sense.You must give time to your investments to grow.You can not stop your SIPs based on short term performance.

Thanks for the confirmation Anil.
I want to really keep investing in SIPs for a very long time.But as you have also told sometime back to come out of any non performing fund before it is too late, that’s why I mentioned to start SIPs for 12 months and then discontinue those very funds which do not perform good and switch back to a new fund.It the fund performs well,I will surely continue the same. But if it does not, should I continue the non performing fund for more than 12 months or give it some more time?I get confused when people say ” Keep monitoring your funds/portfolio every time”. Does it mean that you keep changing the funds from your portfolio when they do not perform well ?

Hi Hrishi
The performance of the fund is to be checked against its index as well as its peers.If you find that the performance of the fund is consistently poor based on these criteria over a considerable period of time only then you should think of replacing it with a better performing fund of the same category. It is important to compare apples with apples and not oranges.
Some rating agencies give star ratings to funds.If you find that when you started your SIPs the fund had a five star rating but after say one year the rating drops to two stars then it is probably the time to exit the fund.

Hi Mahesh
Investment in equity mutual funds is done to meet your long term goals.Long term here means more than five years.So you should see how the fund has performed during the last five years.In short term the performance of the fund can go up and down depending on the market condition.Moreover the performance of the fund has to be considered in comparison to its index and peers.Under the present market condition you will see that most of the funds in this category are giving negative returns.You should consider exiting from the fund only if you see it consistently performing poorly based on the criteria mentioned.

I have started to invest in SIP before 8 months and now I have reviewed my portfolio again based on your comments and my analysis. and want to continue SIP of Rs.10000 in following fund from this month. Currently SIP will be atleast for next 10 year plan.

Hi Shailesh
All the funds selected by you for your portfolio are very good.The only issue is that you have selected three funds from one fund house.Normally to have proper diversification it is suggested to have only one fund from one fund house
Your portfolio is very aggressive and some what risky.If you have risk appetite then it is OK.

Hi Amit
Let me 1st thank you and congratulate you for this wonderful thread… Very informative and guiding.. will certainly make the investors more mature.
I have a couple of questions.
(1) How can I work-out a long term goal and corpus ( I mean technically), so that I decide upon my SIP strategy (I don’t have SIP but want to start tomorrow. By & Large the goals are – meeting my child’s education needs, and a descent post-retirement income).
(2) With this market condition, and having some surplus cash, I feel tempted to invest in stocks.. should I ? and which sectors ?
Thanks – Rohit

Hi Rohit
The first step is to find out the time available for the goals.Then you have to subtract three years for the time available.This gives the time which you have to give your portfolio to grow.Once you are three years away from your goal you have to slowly start shifting in a systematic manner your corpus from equity to debt.As you reach your goal your entire corpus will be in debt.
If you have to find out the corpus required for your retirement you have to first know how much is the money you need presently to maintain your present life style.Then you must be clear about the life style which you want to maintain after your retirement and the money you need if you were to retire today.Next taking the time available and inflation in to consideration you can calculate the corpus required.Taking 12% as the annual return from equity mutual funds you can work out the SIP required.
Please note that calculators are available at most personal finance web sites which can be used by you.
It is not advisable for the first time investors to make direct equity investments in the market now.
If you have some cash available you should select three or four good diversified equity funds and park your cash there.

Thanks Anil. One more question related to Insurance.
I did the classic mistake of expecting returns from Life Insurance policy.
I am paying 32000 for JeevanShri, and another 28000 for LIC Education plan.. while I am covered only for 10Lac both combined. I am going for the Kotak term plan for 50 Lac atleast.. but should I discontinue and cash-in my LIC policies and invest the money into some more rewarding things like MF ?

Hi Mihir
Investments in equity mutual funds are done to meet your long term goals.Tenure of investment should be more than five years.Tenure of three to five years comes under medium term. For this you can consider investing in balanced funds such as HDFC Balanced or HDFC Prudence.
Both equity and gold mutual funds have a place in a portfolio. For the long term equity mutual funds should form the core of the portfolio with gold mutual funds acting as a hedge to balance and add stability to the overall portfolio. So, invest in a gold mutual fund once you have built a well diversified portfolio of equity mutual funds with 5-10% portfolio allocation to gold.

As i have already started a SIP in RGSF so now m planning to start SIP for fund HDFC top 200 for tenure of more than 5 years……tell it is good option or i should go for Fidelity India Growth with same SIP amount and same tenure….

Hi Mihir
Yes you can go for HDFC Top 200. This is a very good fund with proven track record.How ever you must keep a track of your funds after you start investing to take any corrective action if required.

Hi Amol
The funds selected by you are good.But you are already invested in too many funds.Moreover it is not advisable to invest in more than one fund from a fund house.Hence you can increase your SIPs in your existing funds.

i want to know whether above investment are good enough to get good return in long term i mean shud i continue or quit. can i expect return good return. and i want to quit sbi magnum tax .gain (G). please suggest me some good equity sip mutual fund as i want to invest 4000 monthly in it

Hi Pawan
I do not understand your logic of investing in three ULIPs. You can not expect to get any good return in ULIPs. Investing and insurance should never be mixed.
You can select one large cap and one large and midcap fund from the list given above for SIPs.

Dear Anilbhai,
Thanx for your anticipation, show me the way as i am investing in three ulip but i am going to stop further continuation of bajaj ulip and kotak smart adv as already 5 yrs and 4 yrs are completed of same..hence now onward i want to know what should be my concoction of my investment that result into fetch a good return after a couple of year. my yearly investment goal in PPF is 48k . is this sufficient or should be enhance upto max. ie 7ok .. Please guide me

Hi Pawan
The most important thing is to have proper asset allocation. The asset allocation will depend on your age, risk appetite, tax implications, long term goals etc. To meet your short term goals of up to 2 years you should invest only in debt like fixed deposits.To meet your medium term goals of up to five years you can consider investing in balanced funds like HDFC Prudence or HDFC Balanced. To meet your long term goals of more than five years you should invest in equity mutual funds. When you are young your risk appetite is more and your asset allocation will be more in equity and less in debt.If you are not invested in other tax saving instrument you can increase your contribution of PPF.

hi anil,
I am 28 old. and my current investment in equity sip goes like this
DSPBR 1000 monthly
SBI MAGNUM TAX GAIN(G) 1000 monthly
HDFC TOP 200 = 1500 Monthly
as i want to invest arount 6000 more in mutual funds through SIPs. so kindly let me the good funds. time horizon is approximately 5yrs. are above mention fund where i am investing is good or should i discontinued it. as sbi magnum is not giving satisfactory result.
Also let me know the ratio of investment in different equities as i want to invest like this
HDFC Midcap Opportunities
= 1500 Monthly
HDFC Equity
= 1000
DSPBR 100EQUITY= 1000. rest you told me and advise said fund are good to invest

Hi Prakash
Investment in equity mutual funds is done to meet your long term goals.Your investment horizon should be more than five years.If your investment horizon is only five years then it will be medium term.For medium term you can invest in balanced funds like HDFC Prudence or HDFC Balanced.For long term investments have a proper diversified portfolio.You can start with one large cap fund , one large and midcap fund, one multicap fund and one mid and small cap fund.

hi anil.
I want to invest app 7000 in equity SIPs . please guide me which sip mutual fund i should choose and from where i can take it. what is the difference between taking it from a agent or from the centre like hdfc mutual fund office etc or from ETC. what is njfundz financial services.?

Hi Gurpreet
If you directly invest through fund houses then you do not have to pay anything extra.If you invest through an agent then you may or may not have to pay extra. Check up with your agent before investing.Please read the comment given above for Prakash.

Hi Prakash
There is a category called hybrid funds. Hybrid funds have exposure to equity as well as debt. Conservative funds have less exposure to equity and more to debt. Aggressive funds have more exposure to equity and less to debt.Investors can select hybrid funds as per their risk appetite.Both HDFC Balanced and HDFC Prudence are good hybrid finds and are less risky than pure equity funds.

Presently I investing through SIP in the following Fund
Franklin Blue Chip Rs. 2500 (Large Cap)
SBI Contra Rs. 2500 (Value )
Gold ETF 1 Unit every Month
and want to Start new SIP for Rs. 2500 in SBI Emerging Business Fund for Mid cap, What is your take on this fund

hi anil.
I am new in equity investment i want to ask Is this is a right time to invest in mutual funds(equity) if i paid lumpsum amount. i had taken sip of one of the sbi mutual fund which is not performing well and i want to discontinue it 18 install. has been paid up 1000 each. and if i terminate it then would there be any exit load? as it is ELSS fund called SBI MAGNUM TAX GAIN(G).
kindly suggest me what should i do
Regards,
Anu

Hi Anu
In ELSS Funds there is a lock in period of three years. This means that you can not withdraw money for three years but you can discontinue your investment any time. Moreover from the next year you are not going to get any tax benefits from your investment in ELSS funds.
All times are good as far as systematic investment in equity mutual funds through SIP route is concerned as you remain invested for a long time irrespective of the condition of the market. In fact maximum benefit is obtained when the market corrects substantially as it gives you opportunity to buy units at low NAV.
When you do lump sum investments you become hostage of market timing.
As the market has corrected now you can do some lump sum investments. However I would suggest that your first priority should be to construct a good diversified portfolio of three or four equity mutual funds and start investing in them in a systematic manner.
Once you have done that you can think of doing lump sum investments in funds of your portfolio.

hello anil,
I want to invest 5000/month through SIP in mutual funds, i have gone through above article after which i am bit confused which one to choose among all. but one fund that i choosen is ICICI Prudential Focused Bluechip Equity where i want to invest 1500/month, rest you told me where to invest ie whether in mid cap, small cap, multicap etc.
secondly which is good among:
Fidelity India Growth or HDFC Top 200
and HDFC mid cap opportunities and IDFC premier equity (in small and midcap segment)

Hi Anu
The most important thing is to have a portfolio which is diversified across different fund houses as well as categories of funds. Diversification is needed to spread your risk.Hence you must have not more than one fund from a fund house in your portfolio. Initially you can start with ICICI Prudential Focused Bluechip Equity, HDFC Midcap Opportunities and Reliance Equity Opportunities. As your investment increases you can add one or two funds later on. You should make your lump sum investments also in these funds with 60% in core and 40% in satellite.
Once you start your investments you must track the performance of all funds in your portfolio at least once in a year by comparing the performance with index, category average and peers. If you see a fund not performing consistently based on the above criteria you can take corrective action.

HI, have read the article and some comments too, very informative, thanks to Hemant and all participants.I want to invets 10,000 as SIP for a long term Horizon, what could be the best combination so as to get a decent return.

Hi Bhavya
You can construct your portfolio by selecting one large cap fund, one large and midcap fund, one multicap fund and one mid and small cap fund. Do not have more than one fund from a fund house to have proper diversification across fund houses and fund categories.

i want know whether the amount invested in above funds are good enought to provide me handsome return or i must terminate it (if any)

secondly, Is this is right to invest lumpsom amount in Equity mutual fund like. i have taken SIP of sbi taxmagnum(g) but it is not performing well. shud i discontinue it or not. and privide me details of some of the mutual funds as i wanted to invest 4000/month in equity SIPs for app 7yrs

Hi Pankaj
I do not understand the logic of your investment. Why have you invested in three ULIPs? Investment even in one ULIP is a bad idea. You should not expect any good return from ULIPs.
You can stop your investment in SBI TAX Saver fund.
Investment in equity mutual funds should be done through SIP route. When you follow this approach all times are good for investment. By doing lump sum investment you become a hostage of market timing. Lump sum investment should be done only when the market corrects substantially.
You can invest in one large cap fund and one large and midcap fund from the list given above. Both the funds should be from different fund houses.

I read your comment over lumsum investment in equity . So the present time is right for this because market is down at the moment . Can I proceed I have amount but don’t know will go for FD / FMP or put it in equity lumsum.
kindly guide me .

Hi Munish
The most important thing is to have proper asset allocation.Next thing is to have a portfolio of diversified equity mutual funds.Investment in FD/FMP is done to meet your short term requirement of up to three years. Investment in equity mutual funds is done to meet your long term goals which are more than five years away. If you have some lump sum with you which you will not need for five years then you can go for investment in equity mutual funds. If you want to park your money only for short term then go for debt.

Iam regular user of TFL since long back but still my skill in this area is at normal level or you can say still iam feeling unconfident to take decision independently in this . So If you plz suggest me some long term fund or debt funds . So that i invest 50 % amount lumsum in equity and rest in debt fund.

Hi Munish
I do not know about your age and risk appetite. If you are a young person and can take some risk then your asset allocation can be something like this : 60% equity, 35% debt and 5% gold. If you want some exposure to debt along with equity then a balanced fund like HDFC Balanced can be considered. While constructing your portfolio you should have diversification across fund houses as well as category of funds. Hence you must not select more than one fund from a fund house.
Typically, you can select funds like this :
1 ICICI Prudential Focused Bluechip Equity.
2 UTI Opportunities Fund.
3 HDFC Midcap Opportunities Fund.
4 Reliance Equity Opportunities Fund.
After starting your SIPs please keep tracking your funds.

Sir,
I want to invest in mutual fund via VIP method in fundsindia. Is it safe and the Best way to invest or SIP is the Best. Also I want to take Term insurance in Aviva ilife. Is it good or not pls suggest me.

hi anil bhai,
i Have started SIP in large cap fund like icici prudential, and HDFC equity after reading all the article and after taking advice from you. but I have one question about ETF(Exchange traded fund), i want some information about ETF, how it works and is this safe investment if i suppose to do SIP in ETF? what is your view in this regard. if yes then which is the best one i heard from one that “BENCHMARK” is good in terms of ETF. kindy provide me your advice and view.

hi anil,
I am new in equity investment, but i want to start investing in equity through SIP mutual funds, so kindly give your advice how i can start it and from where. If suppose i choose icici direct then Is there any charge deduction for each SIP installment.
Which company is best and from where i can start among icicidirect, hdfc , kotak, njfundz etc . please suggest me

Also suggest me some name of good fund my time horizon is more than five years for investing in equity and my age is 28 yrs, i have read all the above articles but i am confused.
Total amount to be invested monthly = 4000 only

Hi Sumit
Since you are going to invest only Rs 4000/- per month, you can select one large cap and one large and midcap fund for your investment like ICICI Prudential Focused Bluechip Equity and UTI Opportunities Fund. You can contact the fund houses directly for investment.

Hi Sumit
While selecting funds for portfolio you have to consider the category of the fund, fund house as well as the fund. We can not compare apples with oranges. Both HDFC Top 200 and HDFC Midcap Opportunities are very good funds but since they belong to different categories they should not be compared. Similarly a lot of different criteria are used to evaluate the fund houses. ICICI Prudential, UTI Mutual Fund, HDFC Mutual Fund and Reliance Mutual Fund are among the top fund houses based on the criteria of assets under management, number of top performing funds, systems under place in the fund house etc.
Moreover it is important to remember that investment in mutual funds is a dynamic process. It is quite possible that funds which are performing very well today may lose their performance tomorrow. You can not afford to sit tight after investing in mutual funds. You must evaluate the performance of your funds at least once in a year by comparing with index, category average and peers. You should be prepared to exit a fund if it consistently under performs based on the above criteria.

I also had Kotak 50 Equity Growth & DSPML opportunities Growth( now DSL Black) but I have stopped those SIPs. Now I want to invest another Rs 6000 per month in MF via SIP. Please advise in which funds to invest so that I have a balanced approach. I have a long term goal of 10-12 yrs. Also comment if my existing SIPs are promising or not.

Hi Rajasree
Your fund selection is good but your portfolio is very risky as you have invested 40% in core and 60% in satellite and you have invested in two funds of HDFC Mutual Fund house. Since you have not invested in pure large cap fund I would suggest that you select one fund from the three funds of large cap category. This will provide stability to your portfolio.Moreover to have proper diversification across fund houses keep only one fund from HDFC Mutual Fund house and replace other with similar category of fund from other fund house.

hi anil,
After having discussion with you and reading above article which all are very informative and i would like to appreciate you for your dignified service.
Now my question is i have selected following funds and please correct it if it is not balanced according to you.

Large cap = icici prudential blue chip(G) 1500/Month
HDFC = which is good among and to go with HDFC EQUITY OR HDFC MIDCAP OPP. ??? 1500/month

and also give some information on IDFC SMALL AND MIDCAP EQUITY SME FUND – GROWTH for small and mid cap. Is this fund is good to buy because i have not seen any article on this fund.???

Hi Sumit
While investing in equity mutual funds you have to follow core and satellite approach.The core should consist of 70% of your portfolio.It should have only large cap and large and midcap funds. These funds are less risky and provide stability to the portfolio. Multi cap and mid and small cap funds are riskier and should be considered only when the core is in place. Since your investment amount is very small I had asked you to stick to only to large cap and large and midcap funds. You can go for HDFC Midcap Opportunities Fund for your additional purchase only.Having more exposure to satellite will make your portfolio very risky.

Hi Anil and Hemant
I have read all the articles post and the comments . Appreciate and Thanks to all of you guys for such valuable informations. Its really an eye opener for me. I would like to know if there are any seperate guidelines for NRE investors . Would you suggest investing in ICICI GSIP plan. Also I have invested in LIC Samridhi Plus policy (25,000x 4)/year for next 5 years in april 2011 and invested directly in the following shares 2 years back through share khan Dmat account.

I m investing in 3 funds as below.
1) HDFC TOP 200 -2000 Rs
2) ICICI pru discovery fund -1000Rs
3) IDFC pre equity plan -A -2000 Rs
As in my portfolio 2 small and mid cap fund are there. So should I switch to ICICI focused fund (large cap) and for multi cap which one is best quetum long term or reliance equity opportunity fund? And for this sip can I consider one balanced fund ? if yes then suggest one considering my portfolio.

Hi Deepak
Best performing balanced funds are from HDFC Mutual Fund and ICICI Prudential Fund. Since you already have funds in your portfolio from these fund houses I have not mentioned about balanced funds. Yes you can replace Discovery Fund with Focused Bluechip Equity Fund.This will provide stability to your portfolio and there will be no need to have a balanced fund.

Hi Mahesh
Your fund selection is very good. Increase your investment amount in ICICI Prudential Focused Bluechip Equity Fund instead of looking for a new fund. You can expect around 12% annual growth if you remain invested for a long time.

Thanks for your response. I have gone thro the article as you advised to do.. but one thing I should openly confess is I dont understand the technical terms used in the above article and moreover I unable to judge which fund is performing good. Moreover I have not been answered for the query asked in my previous mail.. Hence I again request could you please show me way how to invest a lumpsum amount in SIP , as I am keeping the same in SB Ac. Please suggest me the fund to be invested also.

Hi Parinita
Investments in equity mutual funds are done to meet your long term goals. Your investment horizon should be more than five years. Systematic investment through the SIP mode is the best way.
The number of funds to be selected depends on the amount of investment. If the amount to be invested is small select one large cap and one large and midcap fund from the list given.
If the amount of investment is more you can add one multicap fund and one mid and small cap fund.
All the funds given in the list under different categories are good.
Select only one fund from a fund house.

Hi Vijay
All the funds are highly rated with consistent present and past performance. The portfolio is properly diversified across category of funds and fund houses.
Based on this criteria other combinations are also possible.

Hi JS
Your portfolio is very good as it has highly rated funds with proper diversification across category of funds and fund houses.
Giving any rating will not be proper as investment in mutual funds is a dynamic process.The funds which are highly rated now can lose their rating in future. The key is to keep tracking all the funds in your portfolio and take appropriate action whenever the performance of a fund deteriorates.

Dear Anil,
Actually i dont have much knowledge about these product. hence i want to know your suggestion. whatever would be your view it will be important for me. i heart a mix response on these product. kindly give your valuable suggestion

Question pending:
Hi
I am 22 years old and just started with a job. I plan to invest 5K per month in mutual funds. Infact, I already opened an account and made initial investments in different schemes today itself. I chose following funds:
1.) HDFC TOP 200 (1K PER MONTH) > LARGE CAP FUND
2.) HDFC EQUITY (1K PER MONTH) > MULTI-CAP FUND
3.) HDFC PRUDENCE(1K PER MONTH) > BALANCED FUND
4.) HDFC MONTHLY INCOME-LONG TERM(1K PER MONTH) > DEBT ORIENTED FUND
Now, my questions are:

1.) Is my portfolio right?
2.) 1k which is not shown above is lying pending to invest in gold. Since I donot have demat account, I cannot buy gold etf. I was planning to invest in reliance gold fund but after reading one of your articles, I have put an idea on hold. Kindly suggest me on how to make investment in gold then???:O
3.) Now comes the main question. In order to set up SIP with fundsindia, I am facing some problem since they dont have tie up with my bank for auto debit (something like that). But I didnot want SIP in first place. I rather plan to invest myself in a disciplined way every month after watching market. Now the question is : Does it make any difference whether I invest in hdfc top 200 via SIP or myself invest every month(flexible in this case). I mean, by investing manually every month, am I missing some of the advantages of SIP like compounding returns, lesser maintenance charges by mutual fund house to SIP customers or anything like that..:O
4.) Also, I need to have tax rebate. What are the best investment options for tax savings with decent returns?? Initially, I wanted to add hdfc tax saver as well but lock in period of 3 years made me stay away from that.

Hi Manjo 3311
I don’t understand your thought process in the selection of funds. You have selected all types of funds of one fund house which does not make any sense. For constructing the portfolio please follow the approach given in this post.
SIP is the best mode of investment. Time in the market and not timing the market is important.
You can invest in Reliance Gold Saving Fund if you want. But the investment in gold should be done only after having a proper asset allocation and a good portfolio.

You didnot really answer my questions. Yes, I read that you advised to go for different fund houses. But why??? Are the funds I have chosen not among the best in their class?? Or you think in case HDFC go bank rupt or burst or something like that then I may lose whole my money..What really is the reason to diversify even among fund houses when same fund house is providing you some great funds ???:O
Kindly, read my question regarding SIP. Its like I have to do some formalities to get SIP setup. I may go for alert SIP and invest on say every 15th of month in a disciplined way. Would that make any difference from people who chose auto debit???
Last question again, suggest something for tax saving(best instrument). I have heard of National Pension Schemes which sound good but their procedure is not known to me.
Atlast, If you still beleive that my portfolio is really weird then Kindly split 5k per month into different funds you feel are best. Thanx

Hi Manjo3311
It appears to me that you have not read the posts carefully. If you spend some time in reading the posts you will get answers to all your questions.To understand the principles of investing you can also take the advantage of the free course which Hemant offers.

Hi Monjo3311
You must understand that investing in mutual funds carries market risks. Diversification across different categories of funds as well as fund houses is done to spread your investment risk. It is also important to remember that you must not buy MF schemes based solely on their popularity and sales.
Look at the long term record of the schemes before zeroing in.
Choose the SIP way to invest. By using this mode you do not become a host of market timing.
Do not sit tight on your portfolio after starting your SIPs. Review the performance of funds in your portfolio atleast once a year. Look at a fund’s performance against its peers and benchmark. See if the fund has stuck to its initial objective.Exit a fund if it consistently performs poorly based on this criteria.
Many good instruments for tax saving are available. PPF is one of them.
Equity mutual funds, balanced funds and MIPs are for different category of people with different risk profiles. All can not form part of a portfolio.
Construct your portfolio by following the advice given in this post.

Hey Anil
Thanx for replying. So here is my scenario: I earn 32 k per month. Has decided to put say, 5k per month in mutual funds. Since I am just 22 years old, I can take risk but there is no as such specific goal. So kindly do one thing. Suggest me the funds and money allocation to each fund. I am asking this since I really have no knowledge. Also, highlight a bit on National Pension Scheme which seems good to me.

Hi Monjo3311
Before you start investing you must have proper asset allocation. Since you are only 22 you can have 22% in debt and balance in equity. Debt investment is to meet your short term requirement and equity investment is to meet your long term goals. Investment is never done without a defined goal. As you have asked for NPS I believe that wealth creation for your retirement can be your goal.
As you are very young you can wait for a few years before you consider NPS. NPS is still evolving and many changes in it are likely in near future.
You can have these funds in your portfolio :
1 ICICI Prudential Focused Bluechip Equity. Rs 3000/- per month.
2 HDFC Midcap Opportunities. Rs 1000/- per month.
3 Reliance Equity Opportunities. Rs 1000/- per month.

Hey
What really is the creteria for this selection of 3 funds?? I mean, I dont see any debt allocation in any of these 3 funds. So, you are making me to invest 100% in equity as of now..:O???
Kindly, justify your selection briefly.

Hi Manjo3311
This is the portfolio for long term growth. For debt you can consider other options like bank and post office deposits. Since debt is basically for your short term requirements it is better to use other debt instruments which are not volatile like equity mutual funds.

Dear Anil,
Actually i dont have much knowledge about these product. hence i want to know your suggestion. whatever would be your view it will be important for me. i heart a mix response on these product. kindly give your valuable suggestion

I just finished reading the chain and it was quite informative. Gave good perspective on the different groupings and factors used for MF selection. One additional factor that i have considered and always track for each of my SIP investments are how closely it follows the benchmark. I have planned to drop some investments which have >2% behind the benchmark. Wanted to validate this approach. All these investments are in the long term category.
My current active portfolio contains (where i keep investing in regularly but different days)
1> ICICI Pru Focused BlueChip
2> Franklin India BlueChip
3>HDFC Top 200
4>UTI Dividend Yield
5>DSP BlackRock Small and Mid Cap Fund
6>DSP BlackRock Micro Cap Fund

Fund that I have paused investing as it has under forming for six months (HDFC Equity

Funds that I have stopped investing and planning to redeem and put in above after 1 year of investment. They have underperformed there benchmark in all investments.
1> Reliance Regular Savings Fund-EQUITY
2>Sundaram S.M.I.L.E.Fund-Growth

Kindly let me know your views on the composition and the additional factor that I try to follow.

Hi Vijay
It is clear that you are an informed investor. I have also repeated in my comments several times that one must not sit tightly on the portfolio. Investing in mutual funds is a dynamic process. Hence tracking the funds after starting investments is very important. The performance of a fund is evaluated by comparing it with its peers and its benchmark index. I have only one issue. For the past two years even funds with a good past track record have not given great returns. I feel that six months is a very short period to come to a conclusion regarding the performance of a fund.
Yes I know that the performance of HDFC Equity Fund has not been good for the past ten months.If you do not want to make additional investments it is fine but you should not exit from this fund as it has a potential to give you good returns whenever the market turns.
Your decision regarding Reliance and Sundram funds is correct.
Your portfolio is very good. Only it is slightly risky as you have taken two funds from one fund house.
Your idea of regularly investing is good. But my suggestion is that you should also consider having SIPs even of small amounts in these funds because it is never possible to time the markets.

Thanks Anil for your kind review. On HDFC equity, I have just paused by investment to check performance. I wont be redeeming it. If things get better will restart investment. It has a very solid past performance and i hope it is temporary blip.

On the SIP part, I have a target amount per month to invest. I like the flexibility of investing (by following the index movements) instead of locking via SIP and ECS. I call it more a controlled SIP :). I do agree SIP is the best way to go.

On the 2 MFs from same house, I liked the performance of the MFs and hence selected them knowingly. If you have any suggestions for an different MF under same category kindly share your suggestion.

Hi Vijay
I agree with you that your method of investment gives you more flexibility. SIPs in general are best for investors who can not devote more time and otherwise lack discipline to invest in a systematic manner. I believe informed investors can take advantage of market corrections and invest small lump sum amounts regularly. It does involve a lot more work.
Shortlisting of funds for your portfolio becomes difficult when you are confronted with many good funds from the same fund house. Ultimately you have to take call. Tracking the performance is the key to reduce risk.

Hi Sumit
You have yourself admitted that you do not have much knowledge about the products. The most fundamental principle 0f investing is not to invest in instruments about which you do not have complete knowledge. I hope I have now made myself clear.
In fact I think I had answered you when you raised this question first.

Hi Sandeep
Your portfolio is fine. You can not invest less than Rs 2000/- per month in IDFC Premier Equity. So HDFC Midcap Opportunities will be OK. It will be better to merge your investment in HDFC Prudence Fund with HDFC Midcap Opportunities as investment in two funds of the same fund house is not desirable.

I really appreciate all your articles about investments. It was great help to people like me who has less knowledge in benifits of investments and SIP. It would be of great help if you review my investment plan and share your thoughts.

I am 30 now and earning 44k p/m. After the current premiums and family spendings, I manage to save 5k p/m. I got married las year and my wife is earning 25k and she has a EMI of 5k pm and rest 20k we are investing in Gold ETF. Expecting a new member in our family by coming Jan.

Nice to know that you Term Insurance policy,but while having a coverage of 65 lakh from that,why do you spent another 24k for just 5 lakh coverage…really you don’t need to do that…don’t know what made you think like that…instead of that you can start a SIP on IDFC Premier Equity of 2000 /month (kindly note that minimum amount to start SIP in IDFC Premier Equity is 2000) .

Thanks for your response. Regd the insurance, i recently started the term insurance and that is still under processing. The other policy was sarted before 5 years. Once the term insurance is active and complets first year, i ll withdraw from jeevan anand policy.

Hi Ravindran S
SIP of Rs 500/- per month is not available in IDFC Premier Equity. Reliance Growth is a nonperforming fund. It is not advisable to invest in two funds of the same fund house. For investment of Rs 5000/- per month five funds are not needed. Just stick to these three funds.
1 ICICI Prudential Focused Bluechip Equity.
2 Franklin India Bluechip.
3 HDFC Midcap Opportunities.

Hi Ravindran S
As mentioned in the above post you have to adopt core and satellite approach. First two funds will form the core of the portfolio and and the third will be satellite. How much you allocate to the two portions of the portfolio depends on your risk appetite. If you can take more risk you can increase your allocation to satellite. Ratio can vary between 3:1 to 3:2.

Hi Hemant,
I am really gaining some comprehensive ideas thru ur expertise advice since last few days. Thnx a ton. My querry is that presently i m 37 yrs of age and drawing a take home of 40k pm. My investment details is appended-
1. Insurance premium – 90k per annum
2. Reliance Gold ETF – 2500/- pm for 36 months starting from sept 2011.
3. Home loan EMI – 5000 pm
Apart from this i was unable to go for further investment in the past due to various family obligation. Now i hv accomodated some fund provision to invest for my daughter’s higher education that will fall after 07 years. Since i am a total fresher in the equity linked market, i made up a point to invest 5000 pm in Kid’s recurring deposit (10% compounded quarterly-Taminand mercantile bank) for a tenure of 84 month ( approx return may be 6.08 lacs) and the balance i may avail thru education loan. Another Rs.2000 pm in some mutual fund for 15-20 years (figures pm may go up depending on salary increment in the future).
Request ur advice & guidance for an alternative for my kid’s education investment pm for 7 yrs…. and also suggest me for a suitable MF investment for 15-20 yrs.

From making a regular SIP all are telling HDFC MIDCAP OPP and IDFC SMALL AND MIDCAP . But is there any wrong with RELIGARE MID N SMALL CAP FUND or DSP BLACKROCK MICROCAP FUND ? Do more AUM has to anything on the performance of a fund ?

Hi Simanchal Ratha
AUM is not the only consideration while selecting a mutual fund for your portfolio. For proper diversification all funds in the portfolio have to be considered. No fund can be selected in isolation.

Hi Simanchal Ratha
There is nothing wrong with Religare and DSP BR funds. Only HDFC and IDFC funds have a higher rating than these funds. It is better that the fund should have neither very low or very high AUM.

Hi Ramesh
The funds selected by you are good. But these will form satellite portion of your portfolio. With this allocation your investment will be more in satellite and less in core which will make your portfolio very risky. Instead of investing Rs 2000/- per month in each fund it will be better if you invest more in core and less in satellite. You can also consider replacing ICICI Prudential Discovery with ICICI Prudential Focused Bluechip Equity.

Hi Anil,
Thank you for valuable suggestions. I am restructuring my portfolio with more core and less satellite fund investment. Let have a look and suggest if it needs any change. I am also planning invest in gold ETF, which one is good for gold ETF investment.

Hi Ramesh
You can not invest less than Rs 2000/- per month in IDFC Premier Equity. So you can consider exiting DSP BR Balanced Fund and increasing your investment in IDFC Premier Equity to Rs 2000/- per month.

Initially investment amount is 6000/- per month for long term say minimum 10 years. Can you please suggest how to split this amount in three funds or any other valuable advice for his financial portfolio.

Regarding insurance – should he require any Life insurance plan right now or start with SIP only as he has Health insurance cover of 2 Lakh started this month only and he is unmarried.

Hi Indu
I do not know the financial status of your son. As he is not married and does not have any dependents he will not require any life insurance. When he gets married and has dependents then he will definitely need life insurance. The amount of insurance will depend on his income and savings. He should also be encouraged to save and do his own financial planning.
You must understand that investments in equity mutual funds are subject to market risk. Your selection of funds will depend on your risk appetite. Presently you have 50% in core and 50% in satellite. If you can take risk then it is fine. If you can not take more risk then you can consider some balanced fund like HDFC Balanced Fund.

Hi Deb
Insurance and investment should never be mixed. For insurance go for term insurance and for long term wealth creation invest in diversified equity mutual funds. ULIPs are good only for agents and manufacturers who make a lot of money. I know that by exiting from ULIPs now you will lose money but persisting with them does not make any sense.
You can consider these mutual funds for your portfolio :
1 ICICI Prudential Focused Bluechip Equity.
2 UTI Opportunities Fund.
3 HDFC Midcap Opportunities.
4 Reliance Equity Opportunities.

Could you please advice for the following.
1. Which term insurance should i take?
2.How much should I invest and how long is preferable for the above suggested mutual funds ?
3.should I invest some more mutual funds, if yes , please help me to know them.
4. should I continue LIC jeevan Anand ?
5. should i reduce the amount investment and increase in the euity div fund?
6. Which Health Insurance suitable for me and my family?

Hi Deb
Your income, expenses, savings, dependents, risk appetite are some of the factors to be considered for making these decisions.The first important thing is to have proper asset allocation. Keep 30% in debt like bank and post office deposits, 10% in gold and 60% in diversified equity mutual funds.
Debt is to meet your short term requirements. Investment in equity mutual funds is to meet your long term goals like daughter’s education and marriage and your retirement.

If you n Anil don’t mind then I would like to answer your question. All the funds that you have taken are hugely risky n come in the small n midcap category. You definitely need to rethink on your portfolio strategy as u need to add some large funds to diversify your portfolio.

As the fund houses u have selected are very good u should not have any worries to switch ur funds in the same fund house..

Instead of having HDFC midcap opportunities..switch to HDFC Top 200 which is a large cap fund..n go with ICICI focussed bluechip instead of ICICI discovery fund.. DSP BR small n mid cap fund is a very good fund..but since u already have IDFC small n mid cap fund..switch to DSP BR top 100 fund instead of DSP BR small n mid cap fund.. To better your portfolio..u can switch to IDFC Premier Equity from IDFC small n mid cap fund in the future if you can increase investment by RS. 1000 more..

And I dont think you need to have SBI emerging business fund in your portfolio after having the above mentioned funds..

Hi Prasantha
Investment in diversified equity mutual funds is done for your long term goals where the investment horizon is more than five years. Thee to five years comes under medium term for which you can consider some balanced fund like HDFC Balanced.

I M INVESTING MONTHLY in above sectors
Now i want your advice whether i am investing on the right track or not if not then which fund i have to stop investing and and let me know what are others goods fund s where i can start investing.

ARE core banking sectors funds are good at this point or not? because all above are diversified funds

Hi Sumit
The funds selected by you are good but they form the satellite portion of your portfolio. Core of your portfolio which consists of large cap and large and midcap funds is missing. This makes your portfolio very risky.

Hi Prasanta
You have mentioned ICICI Prudential Focused Bluechip Equity twice. In IDFC Premier Equity you can not invest less than Rs 2000/- per month. Keep only one fund from IDFC fund house and replace other with Reliance Equity Opportunities. Five funds will be fine.

I am 37 years old. Now I am investing in SIP like as HDFC Mid cap opportunity, , HDFC Top 200, UTI master value, UTI dividend yield, ICICI prudential discovery, TATA equity P/E, IDFC premier equity and HDFC preudence fund with Rs. 4000 to 5000 PM. In additional to this I have taken MF single value like as L&T Infrastructure, DSP BR Top 100 equity, Birla sun life Mid cap. This all are started just 09-10 months back. All investments are planned for 10 to 15 years for child education i.e. 30 lacs after 10 yrs and 30 lacs after 15 yrs and 2 cr after 23 year (retirement).
Shall this investment is sufficient for my future planning ? Is this MF is okay ? Shall i switch to other MF / Increase / decrease invetement ?

Hi Sandeep
You have invested in eleven funds which does not make any sense. Moreover you have picked up more than one fund from a fund house which makes your portfolio very risky. Some of the funds in your portfolio are nonperforming.
With the portfolio you have it is not possible to predict whether you will be able to meet your goals or not.
Normally you should have around four to five funds based on core and satellite approach. You should try to save as much as you can and invest systematically only in the funds selected for your portfolio. More funds should not be added.

Thanks for giving me an eye opening information. All MF are started just 09-10 mnths back and now all are performing not good.
Kindly give me the list of MF which I should continue and which MF should replace with other good performing funds?
I can invest comfortably 30,000 PM in SIP. Please guide me to select good funds and investment per fund to achieve my near to my goal.
Please help to guide me for the same.

Hi Sandeep
You can consider the following funds for your portfolio :
1 ICICI Prudential Focused Bluechip Equity.
2 UTI Dividend Yield Fund.
3 HDFC Midcap Opportunities Fund.
4 Reliance Equity Opportunities Fund.
Follow core and satellite approach. I think four funds are good enough. If you are keen to add more funds then you can consider DSPBR and IDFC funds suggested by Manoj.
Investment in equity mutual funds is a dynamic process. Don’t sit tight on your portfolio. Monitor the performance of all funds in your portfolio once a year so that you can get out of nonperforming funds before it is too late.

I u and Anill dont mind then I would like to give u my opinion.. When u are investing a large amount like 30000 per month then it is advisable to have more amount in Large cap funds and Balanced fund n the remaining in small n mid cap funds. According to me u should continue with Prudence fund as it is a balanced fund it will keep your portfolio in control during the volatile market conditions. So invest at least Rs. 8000 in HDFC Prudence fund. ICICI Discovery fund is a risky fund n instead of that u can switch to ICICI focused bluechip which is a large cap fund. Continue with IDFC Premier equity with 4000 – 5000 per month. You can also continue with UTI Dividend yeild n I think u should exit with UTI master value..so that ur portfolio does not become risky. If possible have a multicap fund like reliance equity opportunities fund.. so I divide ur portfolio in this way..

As Anil said earlier..u should not invest in more than one fund in the same fund house.. U should have proper company diversification along with fund category diversification whether its large cap, midcap , small cap or balanced fund..

Thanks Manoj and Anil for proper guiding me. Now, UTI master value fund is going on negative. Shall I wait for positive trend to come out from this fund? Is it possible to transfer from ICICI discovry fund to ICICI prudential focused bluechip equity?

ur welcome.. My personal opinion on this would be to stop investing in UTI master value fund..And when the market improves u can take out your invested amount from that fund.

yes it is possible to switch from ICICI discovry fund to ICICI prudential focused bluechip equity.You can do this procedure from ICICI mutual fund office or from the CAMS..(depends on where u hv purchased this fund.)

I did went through the complete post and various comments made to it. I am 33 years old and do not have any liabilities of loans etc. I live in my parents home in delhi. I have one year son. I want to do investment for my son future and my retirement. I can be moderately aggresive and see a horizon of 10-15 years for investment. I currently have following invsetment for myself:

Hi Ashwin
Your fund selection is very good. However there is no need to go for more than five funds. While selecting funds for your wife please ensure that only one fund is selected from each fund house. You and your wife both can have similar portfolios.

Thanks Anil for your reply. As mentioned in my query, I would discontinue HDFC Tax Saver after Mar 2012 or may be earlier. So, that leaves Rs 1500 + Rs 2000(that i want to invest more)= Rs3500. I would like to invest these in some good fund but not able to zero out on any. Please suggest in which of my continuing one or more fund I can increase the contribution, given my time horizon of 5-10 years.

Do you find my current portfolio better or the one I am thinking of for my wife? Reason I am asking is that I want to invest her money in best possible manner with best possible returns. If there is any scope of improvement in my portfolio, I would like to amend those while continuing with my funds.

Hi Ashwin
You can add ICICI Prudential Focused Bluechip Equity to your portfolio and invest the additional amount in it. When you exit HDFC Tax Saver that amount can also go in this fund. To reduce the number of funds in your portfolio you can consider consolidation by merging your investments in HDFC Top 200 Fund and HDFC Prudence fund and keeping only one of these funds.
The portfolio constructed by you for your wife is fine. Just replace HDFC Equity with Reliance Equity Opportunities Fund to have diversification across fund houses.

As Anil mentioned earlier that your fund selection is very good..You dont have to do any major changes with your portfolio..Just increase the amount in one of those funds..My personal opinion is that you should increase investment in IDFC Premier equity as this is the only small n mid cap fund in you portfolio while other funds are large cap oriented funds..or else increase the amount by 1000 in Fidelity equity fund and switch from DSP BR top 100 to DSP BR small n midcap fund which will diversify ur portfolio even better.

Dear sir , I am AJITH 29years-income Rs.300000/annum (my income will grow by 10-15% every year.) Have SIPS of Rs 2000 each in SBI gold fund, HDFC top 200, IDFC premier EQUITY & BIRLA SL dividend YIELD for 2 months(all growth OPTIONS). I will continue my SIPS for 25-35 years.
(have sufficient insurance-TERM,health,critical ILLNESS & accident). Saves additional Rs 8000 per month for short term GOALS…
Will marry in 1 year & have separate fund for this…
money from MUTUAL FUNDS will be used for …. (1) buying home for 20lakhs in ten years. (2) CHILDREN’S education & marriage (3) RETIREMENT @ 65YEARS …. Will increase SIP in HDFC T200 to 4000 next year & increase all SIPS by 20% annually. Looking forward to join one more SIP Rs 2000 in a LARGE CAP fund (UTI DIVIDENT YIELD)…. Will join a tax saver MF next year.(not interested in shares) .
Please give your valuable suggestions on my portfolio… is it well diversified… is it ok to have 2 dividend yield funds… please guide.

hi anil,
I am investing in mutual funds through SIPs , my investment plan is 7 years to achieve goal and that is to fetch amount of 15 lacs in 7 years, now i want to know whether i am on right track or not in order to get the said amount in 7 years, please guide me and suggest me if this need any amendments in my funds
here my asset allocation.

Hi Pankaj,
Looks like you are investing for some plan you have. Anyway what it looks like if you invest 7000/- per month in SIP and want to have return of 15 Lac in 7 years, your portfolio should give you return of 25 % CAGR. Now that is far fetched for 7 years time frame you have. You can plan by assuming 12-15% CAGR and not 25. If your Jeeavn Saral policy complete 10 years you can withdraw your money that will be amounting to 2 lac (considering 8% cagr). So increase your SIP by assuming 15% CAGR. Happy investing.

Hi Pankaj
All the funds selected by you are good but you have selected funds only for satellite portion of your portfolio. The core of your portfolio is missing which makes your portfolio very risky. It is good that you have decided to invest in ICICI Prudential Focused Bluechip Equity. You can also add one large and midcap fund to your portfolio.

I read your all the article . One question as we all know that there are lots of ups & downs in the life . Suppose if a person has started a SIP for 5yrs duration and he has completed his 3 yrs in the SIP after that, if he do not want to continue in the investment just leave the money to grow will it possible in the SIP and when he has some extra money can he invest in the same SIP folio after 2/3 yrs . I think you can better understand what exactly my concern is. Because some time nothing gone in that way which we plan to invest regularly .

I am new to invest amount in the Mutual Fund. After viewing your site , i got some idea & planned to invest in below funds for long period around 15 Yrs. Please provide your valuble suggestion about this portfolio.

Dear Anil/Hemant
I am also planning to start SIP for long term 16 years and onwards..
I have chosen all large CAP, one multi Cap and one gold ETF, Pls suggest weather its a good Idea or do I have to add some Mid Cap and Small cap also ?

Hi Ankur
Your fund selection is good. Mid and small cap funds are generally riskier than Large cap funds but they have potential to give higher returns. For long term you can definitely go for Mid and Small cap funds.

Seeking some good advice from you guys, since you are very experienced in this field.

I am 26, recent marriage, me and my hubby (age 27) purchased two different properties before marriage. At that time it was an individual choice and provided a good investment and security. Now we have two home loans, but easily manageable, since no liabilities or dependents.

I am 30 yrs old.I am new to yr website-have started reading yr articles very recently and have found very informative.
I have just finished my family liabilities and now have some space money-wise.I have decided to invest in MFs thru sip n that’s why going thru one of yr old article–best MF for sip–i am posting this query so late.
# I am having a near future goal of aggregating about 15-20 lacs in a period of 2-3 yrs for making the down-payment for my house.
# I can save about 50,000 p.m. in MFs for that.
# I recently met a financial planner and he suggested me a 60%(that is 30,000) in equity MFs and 40%(that is 20,000) in debt liquid-funds.
# For equity funds he suggested me 1. Franklin blue chip-10,000
2.HDFC equity-10,000
3.Franklin prima plus-10,000

Sir, I am very new to all this and feel very confused about weather i should go as per his advise considering the small time frame that i have set for my goal and weather the funds advised by him are correct or should i choose some other funds?
Kindly throw some light on my problem and guide as you are guiding so many readers of this site.
I shall be truly obliged.
(p.s. sorry for posting my query on this blog so late but as i said, i have recently started following this blog.)

Hi Deepak Rao
Investment in equity mutual funds is done to meet your long term goals. Since your investment horizon is only two to three years you should not be investing in equity mutual funds as in the short term there is potential to lose money. Invest only in debt for your short term goals.

Hi Anil,
First of all thanks for all your helpful advice.
I am planning to start investing in Goldman BEES gold ETF through my broker Angel Broking.
They are giving me delivery brokerage of .03 or 30 paisa in delivery.
which will come some where Rs7.5/- for 1 unit = 2500/-
Is this brokerage OK or i should negotiate with some other broker ?
Thanks
Ankur

Any Idea ? Can we invest or when it will start ?
IDFC Mutual Fund has announced that units of IDFC Premier Equity Fund, shall not accept further lumpsum subscriptions at the end of business hours on 16 May 2011. It will continue to accept SIPs /STPs amount upto Rs 10 lakhs per installment.

Dear sir , I am AJITH 29years
Have SIPS of Rs 2000 each in SBI gold fund, HDFC top 200, IDFC premier EQUITY & BIRLA SL dividend YIELD
. Looking forward to join one more SIP Rs 2000 in a LARGE CAP fund .out of UTI DIVIDENT YIELD and ICICI foccussed blue chip which one should i select. should i add more funds.. is it well balanced & diversified for a ten year investment plan… please give your valuable comments.

Hi Ajith
All the funds selected by are good. You can consider ICICI Prudential Focused Bluechip Equity and Reliance Equity Opportunities for additional investment. With this your portfolio will be well balanced and diversified.

Hi Deb
As per Value Research definition :
Multi Cap : Funds with 40 to 60 % of assets in large cap companies.
Mid and Small Cap : Funds with atleast 60 % of assets in mid and small cap companies.
So you see that if a fund has around 60 % of its assets in mid and small cap companies it can come in either of the two classifications.
Since the market cap of the funds can change over a period of time it is quite possible that funds can change their categories over time. Hence a period of three years is taken to check the category of fund.
If you check the list of top rated funds in Mutual Fund Insight you will notice that Reliance Equity Opportunities Fund has been mentined as a five star rating fund in Multi Cap category.

Thanks for posting your valuable article on SIP investments and their benefits.
I am new to Mutual Fund and read the article from top,i would like to invest Rs.3000 for long term investment,so selected the below portfolio

Icici Pru focused Blue chip – Rs.1000
Hdfc top 200 – Rs.1000
confused between: ( Rs.1000)
Canara rebeco equity
or
DSP BR equity
I know i am missing out on mutli-cap and mid & small cap, please suggest …
also icici focused blue haven’t completed 5 yrs, where as Franklin India blue chip, DSP BR Top 100 has past 10,7 years exp with great record.
Do you consider icici will be good in coming years.
Thanks in advance.

Hi Siva
You can have ICICI Prudential Focused Bluechip Equity, HDFC Top 200 and Reliance Equity Opportunities in your portfolio.
Presently ICICI fund is the top performing fund in its category. Keep tracking the performance of funds in your portfolio after starting investments.

Hi Deb
To have proper diversification you can select one fund from each of the categories large cap, large and midcap, mid and small cap and multicap. Allocation among different categories will depend on your risk appetite. For a conservative portfolio have more allocation in core and for an aggessive portfolio have more allocation in satellite. You can invest in both HDFC Midcap opportunities and Reliance Equity opportunities. However, please keep tracking all funds in your portfolio.

I have opted for 2 years. They said I can extend the time period at the end if needed. Is it so? Will I be able to do that?
Have I made the right choice? Please do let me know. Are there possibilities I can get good returns in the next few years?

Hi Cyril
Investment in equity mutual funds is done when your investment horizon is more than five years. In the short term you will see a lot of volatility but you can expect decent returns in the long term. You can consider one large and midcap fund and one multicap fund also for your portfolio. Yes, you will be able to extend the duration of your SIP after two years.

Thank you for your immediate response Anil. I have already started investment just 2 days back and came across your Web site yesterday. So do you mean to say I should have invested in multicap too or I can start a multicap investment of INR 2000 after a few months?
I actually do not know the difference between different equity funds or mutual funds. I just did what the bank advised me to. So have I made the right choice? Can you share a URL here where I can learn the difference between different kinds of equity funds? What do you suggest for short term returns, say investing INR 2000 for another 2-3 years.
Will be thankful if you could respond.

Hi Cyril
My suggestion to you is that you must not follow blindly the advice of any one in your financial matters whether bank employee or mutual fund agent. It is advisable to acquire financial literacy which is the aim of this blog. Hence you must go through various posts of Hemant.
You must understand that investment in equity mutual funds is subject to market risks. To spread your risk it is better to diversify your portfolio by investing in three to four funds of different types of different fund houses.
For the short term you should invest in debt like bank or post office deposits.

So you mean to say I gotta stop my investment and re-invest again or something?
But even according to your blogs, ICICI Prudential Focused Bluechip – Growth and IDFC Premier Equity Fund – Growth are good funds right.

Hi Cyril
No, I don’t mean that you have to stop your investment.
Both the funds selected by you are good and you can continue your investment in these funds.
I am only highlighting the importance of diversification to spread your risk. Whenever you have additional funds available for investment you can add one or two more funds of other categories.
Please keep tracking the performance of your funds.

I made a mistake that I invested in ULIP.
I purchased AVIVA Save Gurad policy through ABM AMRO (RBS now) and after 4 year they are saying, there would be 56 % on First Year Premium and 12 % on renewal charges.

These are very heavy charges and not told by representative at the time of offer.

question_1 :- Right now i am not sure whether i should continue or surrender by paying the heavy charges.. please advise..

question_2 :-If I will continue without any premium after 3 yrs locking period up to maturity , should I get full amount after maturity?

I had taken AVIVA Save Guard ULIP policy. I am paying Rs 24,000/ yearly, I have completed 4 years. If I want surrender my policy I’m getting only 65,000 with a loss of 31,000
I do not want to pay further premiums, so could you please give your valuable suggestion how many years I should hold the policy (without paying any premium) so that I will get my total amount of investment without any loss.

Hi Subhash
It is good to know that you have realized your mistake. I hope you have learnt your lesson and in future you will resist the temptation of investing on the advice of relationship manager of your bank. Since you have made the mistake you will have to live with some losses. Nobody can tell you for sure about the time you will have to wait to minimize your losses. You have to just wait and watch.

hi,
i am RAJ 23yr old.just one year before i started my career in soft company.
my salary is 24k per month..so i planned to invest 10k(per month) for 10 years in sip.
so shall i go with 2 large cap and 2 large & mid cap or one in large cap,
one in large & mid cap, one in multi cap and one in small & mid cap.and i
have selected few funds according to these categories.
large–>ICICI Pru Focused Bluechip Eqty (G),DSPBR Top 100 Equity Reg,Franklin India Bluechip
large @ mid–>HDFC Top 200,Birla Sun Life Frontline Equity,Fidelity Equity Fund (G),,Fidelity India Growth Fund (G),UTI Opportunities,UTI Dividend Yield
multi–>Quantum Long Term Equity,HDFC Equity,DSPBR Equity
small and mid–>IDFC Premier Equity Fund,ING Dividend Yield,BSL Dividend Yield Plus-G
i m very much confused about it..so give me a suggestion plz..

Don’t get confused, there are many funds in market so be wise and simple in investing . Age and thus Time is on your side. Follow slightly aggressive approach by selecting 1 large cap(ICICI Pru focused bluechip), 1 large and mid (HDFC Top200)or multi cap(HDFC equity), and 1 small and midcap(IDFC Premier Equity).

Hi vivek
I suggested 4 funds only. However you can choose funds yourself by going through valueresearchonline.com and find funds according to their category, choose 4 or 5 star funds from the list. It is important to know in which fund you are investing and how fund has performed through qualitative ratings given by valueresearch portal. Their ratings change by time according to fund performance so you also track your portfolio once a year.

hi purvesh,
i have one doubt.pls clarify me.everyone is saying
after invest in fund track your portfolio once a year.
suppose i am investing for 10 yrs.at 5th yr one of my
fund performance is going very low.at tat time wat i hav to do?
we cant predict our market..up and down will happen right.
after few years when the performance of one fund is very bad means
do i need to take it off money from tat fund and hav to start
with someother fund?..pls tel me

i have one doubt plz clarify me.everyone is saying, after started
to invest in funds track your portfolio once a year.no one can
predict the market..so up and down will happen..and i m going
to invest for 10 yrs.suppose one of my fund performance is
going very poor at the time of 6th year.at that time wat
i have to do?..do i need to cancel that account ?..and hav to put it
into debt ?..pls if u explain briefly it will be very useful for me

Hi Vivek,
That is what i can say smart investing. Nobody knows what market will do, but compare your fund performance with their peers and index return. You will see the comparative performance of your fund. You can not rely on anyone for your entire investment span. So you have to actively track your folio once a year and that not a big issue. After all its your hard earned money. If fund performance deteriorate over period of time just stop your SIP, exit and invest in well performing fund and start a new SIP. That is what is required at the end of each year. Use valueresearchonline.com for ratings and comparison.
-Purvesh

dear sir,
i want to make 30 lakhs in 10years. i have the following funds. HDFC TOP 200, BIRLA SL DIVIDENT YIELD, SBI GOLD FUND, IDFC PREMIER EQUITY, SBI EMERGING BUSSINESS all having RS. 2000 SIP (growth option.) will i achive my target. is my selection of funds good. should i add more funds… please guide

Its really good to read all your post.I am a regular visitor and I think its the best website for youngster like me who have minial financial knowldge and at the start of career. Reading on Financial Planning, SIP and many such wonderful post by you, have given lots of insight .I would like to seek your guidance on following.

I have long term goal (i.e. House in Mumbai). I am looking for 5 yrs horizon.I have two queries.
1.How can I make my folio better to meet my “BIG” goal
2.Also can you suggest some debt investment to meet my short term goal.

Hi Avinash
Time horizon of five years comes under medium term. Long term means more than five years. For meeting short term goals invest in debt, for medium term equity oriented hybrid funds and for long term diversified equity mutual funds.
For proper diversification select one from each of the categories mentioned above. You can add one mutlticap and one mid and small cap fund to your portfolio. Keep tracking all funds in your portfolio.
For short term goal invest in bank or post office deposits and debt oriented hybrid funds.

Thanks Anil.
I have one large cap and one mid & small cap fund. I will surely go for multi cap fund . But as per earlier post shud I go for one Large & mid cap fund to have better asset allocation or as you suggested shud I add one more mid and small cap fund to portfolio.
Also are there any other options/ways/suggestion for me to meet my BIG goal, looking at 3-5 yrs time horizon.
Also I am looking for bank & PO deposits.

Hi Avinash
In order to spread your risk you must diversify across fund houses as well as different types of funds by investing in four to five funds of different categories. Large cap and large and midcap funds provide stability and other types of funds provide a possibility of higher returns. So you have to strike a balance depending on your risk appetite.
Three to five years is a very short time to meet your big goal. Investment in equity will be very risky in the short term. So have more exposure to debt and less to equity.

Hi Ankur
Whenever you do any investment for long term regularly in a systematic manner in any asset class, all times are good for investment as it is never possible for any one to predict how a particular asset class is going to behave in future. The key is to have proper asset allocation at all stages by doing rebalancing whenever required. Do not put all your eggs in one basket.

HI HEMANT,
I have a genuine doubt i hope you ans the same.I have invested in mutual funds through sips and also lumpsum over a period of time.I know the markets are down now and probably will recover over a period of time.My ques basically is can i convert my lumpsum investments to a stp in the same fund house i.e. stop the payments from the bank and convert them from the lumpsum amount.All my sips and lumpsump amounts are either in equity or balanced funds in the growth options.

Hi Deepak
Normally for the purpose of investment you can put a lump sum amount in a liquid fund and transfer from liquid to equity fund via STP. Why you want to convert your lump sum investments in equity or balanced funds to STP does not make any sense to me.

Dear Mr Anil
My aim basically is to save putting in more money into the sips via the banks and convert the lumpsum into the source for sips and invest the money which i am planning on investing elsewhere.This way the total amount in the funds remain the same and i can invest the amount elsewhere.

Hi Rahul
It is not clear how long you have been investing in these funds. After starting your investments it is important to track the performance of all funds in your portfolio to weed out non performing funds. I would suggest that you should check the performance of the funds by comparing with the benchmark and peers and get rid of funds which have been consistently under performing.

I am investing from last 2 years and want to invest for 10 yr span. This year most of funds are on negative side.Pl advice whether investing in these SIP plans would be right or not? My age is 29 and expecting good corpus after 10 years.Pl comment on individual SIP’s whether to continue or not.

Hi Rahul
I would again like to stress the importance of regularly monitoring the performance of all funds in your portfolio at least once a year. It is quite possible that even if you select the best performing funds the performance of some fund in your portfolio may deteriorate with time. The ratings of your funds are as follows.
1 Reliance Growth ***
2 HDFC Equity *****
3 Birla Sunlife Frontline Equity ****
4 DSP Blackrock Top 100 Equity *****
5 Kotak Opportunities ***
6 Principal Emerging Bluechip No Rating
I hope this rating will help you to decide about exiting from the non performing funds.

i have following funds which i started in the month of sep.2011 and i intend to keep investing for atleast 8 to 10 years……
1.HDFC Top 200———————————-Rs 3000
2.ICICI pru.focussed bluechip equity————Rs 2000
3.Reliance Equity opp. fund———————-Rs2000
4.BSL dividend yeild fund————————Rs2000
5.Kotak Gold————————————–Rs1000

can you give me a tentative figure which i may receive after 10yrs so that i can plan for my future objectives…..
thank u

Hi Malik Arshad
Your fund selection is very good. It is very difficult to predict the return from your funds. However if you remain invested for more than ten years you can expect annual return of anywhere between 12 to 15%. Have proper asset allocation and keep on tracking your funds.

Hello
I want to invest 14000pm SIP and I have shortlisted few. Can you suggest which one and how much Rs to allocate? Minimum one fund from each catagory.
1) large CAP catagory
HDFC Top 200
ICICI Pru Focused blue chip
DSPBR Top 100
2) Small and Midcap catagory
SBI Magnum Emering Business
IDFC Premeir Equity plan A
HDFC Midcap opprotuinites
3)Diversified catagory
HDFC Equity
UTI MNC fund

Namaste Anil/Hemant jis …thanks for transfer from TAMAS TO JYOTI literally..excited to cross this website. At least I came to know I am late for the bus…no regrets. I have jumped into the water for swimming..which I know I have to. Please advice for my portfolio

Hi Seenu
It is never too late. You are a doctor couple which is a big plus point. Doctors normally are not bothered about retirement as they keep on earning for a very long time.
Please have proper asset allocation in various asset classes like equity, debt and gold. You can also perhaps invest in land to have your own clinic/nursing home.
PPF is a good investment. How much depends on your asset allocation.
Insurance and investment should not be mixed. So investing in ULIPs is not a good idea.
It is preferable to invest in diversified equity mutual funds for your kid instead of having a children gift fund.
Keep tracking the performance of your funds to get out of non performing funds.
You can also think of availing the service of a certified financial planner.

Hi Seenu
You can select either HDFC Equity or HDFC Top 200 instead of HDFC Growth.
Reliance Equity Opportunities can be substituted for Reliance Growth.
You can continue in PPF. NSC can be considered if it fits in your asset allocation.
Term Insurance and Health Insurance are sensible, ULIPs are not.

Hi, i have one doubt.which one is good flexi sip or fixed. If it is flexi i can put more money when the market is low and i can invest less when the market is high right ?.i m going to invest for ten years in sip..so give me solution

Dear Anilji,
Greetings of the day!!
I made a good money ( more than 20% / year ) by investing in SIP between 2007 to 2009. I took a break for more than one year and now again ready to start investing in SIP, which I feel is the best option in turbulent markets.

Since the flavor of the funds changes with market conditions and performance, I need your expert opinion before I start my SIP from next week.
I know these question have been asked many times recently and in the past also, but will appreciate if you can spend some time to reply to it.

I plan to invest 5000 / month in the following MFs for a horizon more than 5 years.

Hi Anand Shah
For an investment of Rs 5000/- per month you do not need so many funds. Out of the funds shortlisted by you select one large cap fund,one out of HDFC Top 200 and HDFC Equity, IDFC Premier Equity. ELSS Fund selected is fine.

Need suggestion on Kotak Invest Maximum
Where you pay 1Lac every year for 5 years, lock in is 5 years , 1 lac can be claimed under 80 c and Income after 5 years is tax free.
Current they have two plans 1> Kotak Frontline Equity Fund(large cap equity) 2> Kotak Classic Opportunities Fund (large / mid/small cap equity).
After first year SIP can also be done 1lac/12, STP is also allowed.
40% of total can be taken as loan also 12.5% per annum rate after 2 nd year
1 lac X 10 = 10 lacs life insurance also given.
Pls suggest, I am planning to deposit in PPF , is this Kotak fund is more beneficial ?

I got to know the powerful of SIP investment,to acheive our goal through your article,
Finally after gathering information about investing through SIPs
I planned to invest for long term 10 years and invested in,

Hi,
I am investing 4000/- each in Franklin Bluechip, IDFC Premier Equity, DSP top 100 BlackRock and HDFC top 200
I want to invest another 4000 in one of the good Equity MF. Please suggest.
I am already investing almost 1.5 lacs per year (self and employer) in PF+PPF.

Hi Ankur,
Your equity portfolio looks good and diversified. You may add one multi cap fund to your portfolio for added zing. But it is surprising to see you are equally inclined to debt portion also that too long term debt (locked). I don’t know your age but you should not invest in PPF+PF more than some limit as it is locked for a long term. Even if you want to invest in debt you can go for non tax saving debt funds which are liquid in nature. However if your age is under 35 you should be more inclined to invest in equity.

Hi Purvesh,
Thanks for the reply, my age is 32, investment in PF+EPF is directly through my employer, which is around 1 lac combined(self + employer), of which i can claim upto 50k(my contribution) under 80 c (highest tax slab 30%). so I put another 40k in ppf and 10k term plan to claim 100% under 80c.
Putting money in ppf is only for tax saving purpose.
Suggest me if I am missing anything here .

PPF will lock your money for more than 7 years.. and ELSS lock for 3 years.. if you stay invested in ELSS for 7 years what you are doing for PPF, you will definitely get good returns…Still four months left so divide your money for ELSS in four parts and invest in this attractively low PE market.

Hi Purvesh,
You are talking absolutely right but this will be only for this year from next year we have to think about some thing else.
Also , My investment will be a lumsum for around 50 K in ELSS as we have to show the document for claiming tax.
Can you pls suggest me some good ELSS for good return.

Sir,
I wish to invest 10000 per month via SIP. I am 28 years of age and have only long term goals, means after 15-20 years. I want to built corpus for children(2) education, their marriage and Retirement corpus. My normal monthly expenses are around 30,000 INR, no financial liabilities as for now. Is Rs. 10000 per month will be sufficient investment at present stage or I need to invest more? Also Suggest me funds as per my above requirements.
Many Thanks in advance.

Good to see you are starting investing very early. First of all find the target corpus you need for education and marriage with the help of planner tool available from franking templtion. It will give inflation and risk adjusted return required after 15-20 years. It will help you in deciding how much SIP amount you need to invest.
Than invest in 4-5 funds. At your age go aggressive

Dear Purvesh,
Many Thanks for handling my query and guiding me.
Kindly advice me for this also- Last month, I have started DIYSIP in UTI Gold ETF via my HDFC Securities online trading account. Do You think, it is a good decision? Should I continue with it or Exit?

Gold investment is good only if your portfolio is well diversified and it should never exceed more than 5-10% of overall portfolio. Check what are the charges you are paying for services. And also check how much you need to invest in gold ETF.

Thanks Purvesh for prompt reply.
Also can you pls suggest me a good ELSS, I want to invest in lumpsum for this year for tax saving and keep it locked for three years. we will see what happens next year with DTC and depending on that I will add more units to it.
I have HDFC top 200, DSP Blackrock top 100, Franklin Bluechip, IDFC premier equity,, 4k investment through SIP in all these.
Also , If my wife is holding ELSS folio and I pay to buy the units , can i claim the amount under 80c?

Hi Tushar
You have to decide the time horizon depending on when will you need money. Similarly you have to decide about the amount of investment depending on how much is the money needed and how much you can save and invest.You can consider investing in a balanced fund like HDFC Balanced Fund.

Your father will be retiring within 6-7 years from now. It is not advisable for him to invest in equity aggressively. Normally a person should not invest much in equity as he approaches retirement. If he is investing a very small portion of his income that is fine, but sip works well in longer run than 5 years. Invest very small portion in balanced fund is good option. Also consider investing in MIP which is having at max 30% in equity and rest in debt. HDFC prudence invest upto 70% in equity and best performer in category.

I suddenly came across the conversation. Hats off to you guys, I’m impressed and applaude your unbiased and frank opinion without any ulterior personal agenda. You will do a lot of good to all those who heed your advise. I’ll soon solicit your advise for my self and my son who is just entering into self earning phase of life. Thanks again and god bless you guys.

In order to introduce my son 21 yrs of age to the SIP concept over a horizon of 10 yrs, i have selected the following as monthly SIPs after reading through the thread above, please advise:
DSPBR Top 100 – 1500
HDFC Top 200 – 1500
Reliance Equity Oppr – 1000
UTI Oppr – 1000

Hi,
The last SIP for my Sundaram select midcap-appreciation fund is due in Feb. I want to invest in a better performing fund in the same category March onwards. Could you please suggest funds for the same( exclude HDFC funds)? What is your opinion about IDFC premier equity – A and SBI Magnum Emerging Busi in this regard? Which one is better?

I am 32 and planning to invest Rs. 6000.00 p.m. for next 10 years. Gradually, I can increase the amount but for now, Rs. 6,000.00 is my budget. I have selected below funds. Can anybody please suggest whether the selection is correct or not-:

Hi Nitin
Follow core and satellite approach. Invest 80% in core large cap & large and midcap funds and balance in satellite funds.Investing in a balanced fund like HDFC Balanced Fund is also a good idea for a new investor.

Hi Hemanth,
I am 34 Yrs old, and new to investiments,
I gone through your artilce on this page, its worth information.
I found top perorming funds on Moneycontrol
Can we follow this link and choose the best fund based on Crisil rank 1 .
Could you please suggest ?

Hi Eswar
Performance is not the only basis for selection of funds.Some of the factors to be considered before investing are :
1 Monthly Income
2 Monthly Savings
3 No Of dependents
4 Risk appetite
5 Investment Horizon
6 Investment objective
For a new investor it is better to start his investments in a balanced fund like HDFC Balanced Fund.

Hi Easwar
You should not blindly follow moneycontrol or anybody else.Take Hemant’s free eCourse if you have not taken it so far.Go through the factsheets of the fund houses to know about the funds and select those which meet your objectives and risk appetite.

Hi Shailesh
HDFC Midcap Oppotunities is a good fund. It is not advisable to make changes in your funds based on the short term performance of six months. You can wait for atleast a year before thinking of making any changes.Moreover you will have to invest atleast Rs 2000/- per month in IDFC Premier Equity Fund.

Thanks Anil for your quick response.
If Fidelity’s fate is a bit cloudy, any other alternates would you like to recommend? Appreciate if you could give me some options and then I can do my research and select one of them.

Hi Vivek
Both Fidelity Equity and UTI Opportunities are from Large & Midcap space but there is no fund from Multicap space in your portfolio.So you can perhaps think of replacing Fidelity Equity by Quantum Long Term Equity.

Hi Vivek
Most probably the business of Fidelitty will be be acquired by some business/fund house.Normally when the business of a fund house is acquired by some entity investors are given options to exit or remain invested with the new entity.

Hi Vivek
Fidelity fund house has good reputation. Presently they are looking for a buyer. In India we have seen a lot of mergers and acquisitions in mutual fund houses in the past. This is not something new. It has been happening for quite some time. There is market regulator to take care of the interests of investors. The only risk is that with the change in management the performance of the funds may be adversely impacted.But then investors always have the option of exiting.

Hi Vivek
When the news of Fidelity’s possible exit first came in the media I was a bit surprised. The reason could be around Rs 62 crore of loss it posted last year. I also discovered that out of the 41 fund houses now operating in India 22 are in the red. Considering this it would be a good idea to consider only those fund houses while considering investments which are in the green.

I m planning to start few SIP’s worth 40k per month..my goal is to stay invested for long term,for more than 10 yrs…i have short listed my funds but cant decide how much to invest in each fund and how many to choose from the list below..

Hi Harika
You have selected highly rated funds.However you don’t need six funds.Just stick to the following four funds:
ICICI Prudential Focused Bluechip Equity
UTI Opportunities
HDFC Equity
IDFC Premier Equity
You can invest Rs 15000/- in each of the first two funds and Rs 5000/- in each of the last two funds.
Keep tracking the performance of your funds after starting your SIPs.

dear sir
i am in a goverment job .my sal is 25k.
i hv jeevan anand of lic and reliance ulip@5k
per annum.i want to invest in mf and also looking for
a good term insurance.kindly make a porfolio
for me. i can invest 5k per month in mf and10k p.a. for
term insurance

Hi Anirban
You can manage with just these four funds :
DSP Black Rock Top 100
HDFC Top 200
IDFC Premier Equity
Reliance Gold Fund
Keep around 70% allocation in first two funds and the balance in the last two funds.

I have accumulated Rs 1,00,000 to deposit it in PPF on 2nd April 2012 for my son. Recently i met with one person , he advised me to diversify around 30,000-50,000 Rs one time in ICICI Prudential Focused Bluechip Equity – Growth Fund from that 1 lac rs(50 % debt and 50 % equity) . My investment horizon is of 10 years . I dont want to go for SIP option. Kindly advised me. I am very much confused. Thanks in advance

Hi Suraj
If your investment horizon is ten years then you can consider investing in diversified equity mutual funds.I don’t understand your aversion to SIP as it is the best mode of investment.Although ICICI Prudential Focused Bluechip Equity is a good fund it is better to invest in two funds to have diversification.
If you want exposure to equity as well as debt then you can also consider a balanced fund like HDFC Balanced Fund.

What do u think of it? Is it adequately diversified? Do u suggest if any of the mutual funds need to be discarded now? I have been investing into them since Nov 2010..I wanted to add another 1000/- in my existing portfolio, which fund is better? Also I am quite skeptical about holding onto BSL. Is it better to redeem it now and invest into another fund, if yes which one? or is it better if i rather invest into existing profile? Again which fund?

Thanks Anil, but my questions r still unanswered… Should i hold onto these funds other than BSL? and make another 2000 investment in existing fund profile or BSL Dividend Yield Plus ? I will appreciate ur suggestion and tym

I have invested 20,000 Rs in Sundaram BNP Paribas Energy on 1st jan 2008 @ NAV 10 Rs. After 4 and 1/2 years my return is (- 25 %) … NAV today is 7.60 . I am highly confused about what to do with this fund. Should i invest 1000 Rs monthly so that my average price of Rs 10 wil come down and then sell OR …or should i sell immediately and switch to different fund.?

sir,
thank u ……. i have a confusion… is it good to have birla MNC fund(mid cap)… or should i have birla divident yield or icici discovery or some other fund… in all good funds more than 15% stocks are from BANKING… also i have a banking fund… so i selected birla MNC fund(mid cap) for diversification .. what is ur opinion… i dont want IDFC PREMIER EQUITY… because there is no provision of additional purchase more over i can have only a sip of 2000… in all my funds i have multiple sips of rs 500…. this is not possible in IDFC PREM…EQTY. …….PLEASE GUIDE ME .. is there any other suitable fund – large , mid , small cap or diversified fund which will suit my portfolio…
also which is better for me hdfc top 200 OR icici focc blue chip … OR should i have both … please guide… i purchase gold coins so i dont need a gold fund…

Hi Bijesh
The funds you have mentioned are mid and small cap funds.Both funds have four star rating.These funds are riskier than pure large cap and large and midcap funds.Exposure to these funds should not be more than 20% of your portfolio.If your portfolio already has core funds then you can go for these satellite funds.
Both funds are good.I am not sure if one of these can be called the best fund.

Thanks alot for your help..I’m 28 yrs old planning to invest in SIP mutual funds from this month last for the next 10 years but will continue if its doing good..i’m not going to put in any other SIP for time being so my broker told its good to take some risk & put in these large & mid cap funds..by the way i have no core funds..so is this decision wrong …please advise. Thanks

Hi Bijesh
While starting investment in diversified equity mutual fund you have to adopt core and satellite approach.Core funds should have around 70% of your portfolio and satellite the balance.The core will consist of pure large cap and large and midcap funds.These funds are less risky and provide stability to your portfolio.
Satellite funds are risky with potential for high returns.There is no point in having satellite funds unless your core in place.Investing only in satellite funds makes your portfolio very risky with possibility of losing money.

Thanks alot for your help you are really helping me out thanks. So which we be the best Core funds for next few years… i liked HDFC Top 200 but my broker told me its coming down a little nowdays so stay away from that. I will be investing Rs5,000 for the next 10 years and i want only one SIP. So should i only go for core without satellite funds..by th way i’m ready to take little risk since its only for 10 years..the funds which i choose d first was

Large Cap:- Franklin India Blue Chip

OR

Large & Midcap :- HDFC Top 200
(wanted to invest only in any1)

But my broker told to stay away from these because he saying i won’t get high returns since its already been on the top ….please advice & you are doing such a wonderful job please keep it up. Thanks

HDFC Midcap Opportunity is also a good fund but it is not large cap so unless you have got your core funds in place, don’t get into satellite funds. I don’t know much about the SBI one.

Since your time horizon is 10 years, I don’t think HDFC Top 200 coming down matters. Moreover, if any fund is good and it is going down, don’t you think it is a good time to invest rather than wait for it to become costly again and then buy?

If a fund is good and you are planning to do SIP for long term I don’t think the price matters because it will average out all the fluctuations over a period of time. As Anil advised you should invest in large cap funds and more percentage in core funds.
Both HDFC Top 200 and Franklin bluechip are good large cap funds. Why don’t you invest 50% of your total SIP amount in both the funds? After investing don’t just forget about your invesments, keep monitoring them once a year and check their performance.

I am just a regular reader of this blog so let the experts also give you some advise and then you can take a call.

Hi Bijesh
I agree with what Vivek has said.I think in order to have diversification it will be a good idea to invest in two funds instead of only one fund.So You can consider investing in ICICI Prudential Focused Bluechip Equity and UTI Opportunities Fund to start with and later on add HDFC Midcap opportunities.

Hi,
Presently I am investing 8000 per month in SIP. From next Financial Year, I am planning to invest Rs 16000 per month. I have finalized my portfolio as following:
1. UTI Opportunities: 3000
2. ICICI Pru Focused Bluechip equity: 3000
3. HDFC Balanced Fund: 3000
4. UTI MNC: 3000
5. IDFC Premier Equity: 2000 (presently investing)
6. HDFC Top 200: 2000 (presently investing)
Request to kindly provide your opinion and valuable suggestion on this portfolio. I want to invest in SIP for next 25/30 years. Besides, I have around 1.5 Lac from SIP that I have closed. If I want to do STP into any of the 6 funds mentioned above, which fund should be selected and what should be the amount.
Regards,

Hi Soumya
All the funds selected by you are good. Presently there is no multicap fund in your portfolio. So you can consider investing additional amount in some multicap fund like Quantum Long Term Equity.

from above I like to keep in my portfolio are
1. ICICI Prudential Focused Blue-chip Equity Fund-Retail-Growth-2000/-
2 .UTI Opportunities Fund-2000/-
3. Magnum Emerging Business -1000/-
4 .Quantum Long Term Equity-1000/-
5. HDFC Balanced Fund -1000/-
Is above selection is good or suggest me any fund from shortlised to replace above?
I really confuse between large cap &midcap funds
Also suggest me any good agent from which Ican take these mutual funds?
Can I increase/decrease my investment in funds in midway?
Also give initial investment required in above funds while starting these SIP?

Hi Sanjeev
Your fund selection is fine. You don’t need any agent. Just go to the offices of the fund houses or CAMS and KARVY to complete the formalities. You will need copies of your PAN Card and Address proof for KYC. You don’t need to invest more for starting your SIPs. Investment amount can be increased or decreased any time as per your convenience.

Thanks for your advice. what are the charges of CAMS & KARVY & advantages & disadvantages?
Investment made directly through fund houses has any advantages & disadvantages?
Is bank statements required while starting SIP?
what about magnum emerging business fund & can I take additonal mid&samll cap fund? which is one?

Also If SIP term is over & then I will get money retun as lumpsum or partially? any charge will applicable on return money?
Please advice

Registrars and transfer agents don’t charge for their services. There is no disadvantage of investing through them or fund house. Bank statement is not required for SIP. You can go for full or partial redemption. No load is applicable if you do redemption after one year.

While Anil sir has given you perfect advise, instead of going to offices of fund houses try to invest online. It is very simple and easy to transact. It also gives you a complete picture of your MF portfolio under one umbrella. You can check with your bank if they provide any such service, generally all private banks do.

Initial investment varies from fund to fund but it is generally around Rs. 1000 and you can increase your SIP anytime you want.

Hi Vivek
Initially I made some investments through my private banks but I have discontinued it now as I am not happy with the services provided by the banks. They make many mistakes and then are reluctant to take corrective action when the mistakes are pointed out to them. I now prefer to do my investments in the oldfashioned way by directly contacting the fund houses or registrars and transfer agents. You have to just sign a transaction slip which is not much work.

Hi Vivek
These were off line investments but done by the relationship manager of the bank. He just obtained my signatures on the forms but made many mistakes while filling the forms. I had made lump sum investment in one fund and also given mandate for the SIP. However ,I found that SIP did not start. For starting the SIP I had to go directly to the fund house. For making corrections in particulars like spelling mistakes, bank details, email ID, PAN Number etc I had to again approach the fund houses directly. Even the statement of my investments which the bank sends every month has one error which they have not been able to correct inspite of my several reminders.

Hi Vivekji,
I am planning to start a SIP in mutual funds
Which are the trustful websites for online investments in MF thru SIPs.
Can u please mention the process ? how is the KYC done in online process ?. Please advice me.

Select the one that has got physical customer care presence in your city so that they are approachable in case of any issue. If you are happy with the bank you deal with and they provide this service, you may consider them. I also deal with sharekhan and found them ok but again it may vary from city to city and branch to branch.
Also, check for any charges that may apply while selecting a brokerage firm for investment. A combination of good customer care + easy to use online platform [ask for demo] and nominal charges is something you should look for.

Regarding KYC, it is not done online. You have to fill a form along with your address proof to get it done. The form can be provided by the company you chose to invest with and they will process it as well. You can check the KYC status on CVL India website.

Hi Hemant/Anil,
It is adviced that the investment in mutual funds thru SIP, should be goal oriented.
I want to start a SIP, for Rs 2000 initially. I am planning to increase SIP amount after 6 months.
My goal is to build retirement corpus of XYZ amount in 15 years time.There are many SIP calculators avaible in the market, which give the future amount . Here we are asked to insert the expected rate of return in % . My question is
1)what can be the average expected rate of return from a equity based mutual fund for 15 years horizon.(Please suggest rate for sake of calculation.I know that it may vary in future).
2) What is difference between CAGR and actual rate of return ?
Is CAGR and IRR same thing ?
3) Also suggest please share SIP calulation formulas or calulator. there are many on the internet , which add to confusion as non of the results match each other

Hi Moksha
For a first time investor it is better to start with a SIP in a balanced fund like HDFC Balanced Fund. Later on more funds can be added. One should try to save and invest as much as possible. Calculated SIP amounts are only indicative based on certain assumptions. Exact calculation is of no use. A conservative figure of 10% return can be taken for the purpose of calculation. You can get information regarding various types of returns from Value Research website.

Hi Mihir
Instead of randomly selecting funds you should have a portfolio of diversified equity funds. When you have already started SIP in Reliance Gold Savings Fund why are you looking for Gold ETF now?

Very informative articles and thank you so much for all your time and good work in educating people all around!
When talking about non performing funds , and removing them from ones portfolio, what time frame are we looking at or when does one come to a conslusion that a fund is not performing well and should be removed and on what criteria.
is 6 months , 1 year good enough time frame to judge from the time one starts investing in the particular fund?

Hi Santosh
Performance of a fund has to be evaluated by comparing it with its index and peers. One should exit a fund only if it underperforms consistently over a considerable period of time consistent with the time frame of investment. Six months is not the time frame to judge the performance. Give around 18 months.

Hi CGGiri
You should not be investing in more than four or five funds. You have not diversified across fund houses as you have selected more than one fund from three fund houses. Many of your funds are nonperforming.

Hi Hemant/Anil/TFL Readers,
As I was going thru Value Research Online website , I found an article titled ICICI Prudential MF Launches SIP Insure Facility. There is some kind of insurance attached to the SIP .
I didnot follow it completely.
Any ideas/suggestions/ expalnations on this offer from ICICI prudential ?

My understanding is very limited of the financial word so may be those below are theoretical questions:
1. Typically the recommendation for long term investment via the MF route is to leverage 5-7 funds. The count of Equity mutual funds is over 297 as of Apr’12 (AMFI data). So what happens to investor money which are spread over the rest of the 292-290 Equity funds ? I understand the rankings and performance of these funds would change.
2. The total number of Open End Mutual Funds Schemes are 743 of which Open End Equity Schemes are 297. Close End schemes are only 3.
The total amount in Open End Equity Schemes is Rs. 2752 Crores while the total amount in all Mutual Funds Open End Scheme is 566,640. This means 0.4% of amount is involved in the Open End Equity market.
Does this mean that Equity MF based investment is “unpopular” in India ? It also could mean that there is tremendous potential for it to grow !

Hi Hemant,
I am 32 yr old, I have read most of your articles and many of the articles you have suggested to go for SIP for investment . I am new to this and dont know how to proceed like whom to approach to take SIP, procedures, where to take etc. .
I request you to give basic details and which one to take

I am 35 years old and invested in below MFs. After reading your article and all user comments, I understand that it was a mistake by over diversifying. Which are the funds I can get rid of from the below list. Would like start SIP in DSP BR Small and mid cap Rs.1000 pm. Could you please suggest how to consolidate below portfolio?

I have invested in the below Mutual Funds since 2008. I have done away with few funds in these years but my current portfolio is as below. Can you please advise if they are good picks or should I change to the ones you have mentioned in this article. I really want to make sure that I am on right track. I am looking for long term investment with financial freedom in mind after 15 years.

I am in age of 39 with two children age of 9 & 6 (girl and boy). For their marriage and education i have started one SIP – HDFC Equity – G and would like to take another 2. Kindly advise which is good with less risk.

I am 25 years and started earning from more than 2 years. I am beginner in investing. Since I am the sole bread earner for the family my risk appetite is moderate (alteast of now). I have decided to invest in equity mutual funds thru SIP for long term. To start with I have decided with below. Could you please share your opinion?

I need a suggestion.I can invest 1000 rs pm in mf through sip.pls suggest me thru which fund I can go with.If they insurance is also covered,I am lucky.pls suggest me.I need good returns.I dont bother about risk.I am planning for 20 yrs.

I have learnt a lot by reading your articles about financial planning, and decided to hold two equity mutal funds as I am planning for long term investments.
As I have witnessed large growth in FMCG & pharma sector, I am planning to go for 1 large caps fund in FMCG & other in pharma sector.
please sugegst best mutual fund in this category which has been performing consistently well and considering all the aspects.

As I work 9-10 pm, and ideally donot get sufficient time to compare all the parameters.
Hoping for the best advice.

I am 33 years . I am beginner in investing my risk appetite is moderate . I have decided to invest in equity mutual funds thru SIP for long term atleast for 10 years. To start with I have decided with below. And where should I contact to invest in Mysore. Could you please share your opinion?
1. SBI Magnum Contra (SIP 1000/- per month)
2. HDFC top 200 (SIP 1000/- per month)
3. Reliance Growth (SIP 1000-/ per month)
Waiting for your valuable inputs..

I think u shd opt for HDFC/ICICI Balanced Fund : Rs 2000/- and a Large Cap fund like Franklin India Bluechip/UTI Opportunities : Rs 1000/- keeping your risk appetite and goal in mind. HDFC Top 200 is a good fund but, in my opinion u must diversify ur fund managers as well. Later, when u have more funds to invest on a monthly basis, u can start SIPs in Mid and Small Cap funds like SBI Magnum Emerging Businesses and Reliance Equity Opportunities fund. However, make sure that almost 60-70% of ur investments must be in balanced and large cap funds, and ur total exposure to small/mid cap must not be more than 30-40%.
U can start ur SIPs online from anywhere. Just open the fund manager’s website and register urself for online SIP. Someone from the fund manager will call u and collect all the required documents for KYC (Know Your Customer). Alternatively, u can look at quikr or olx for someone who is working as an agent with various fund managers. Hope this answers ur questions. Good Luck !

Do you think I should consider switching to Birla Sunlife Frontline Equity Fund Plan A (G) from DSP Black Top 100 Equity fund?
Also should I get rid of HDFC Top 200 fund and invest in a small & midcap fund like IDFC Premier Equity Plan A(G)?
{Diversified Equity funds belong to the core or satellite component of MF investment ? }
Please advise.
Regards,
Rajasree

hi hemant,
first of all thanks for nice article.
Presently i am investing Rs.8000 per month in DSP BR mutual fund in following funds through SIP since last 2 years. The details are as under
small & mid cap- Rs.3000
world agriculture fund -Rs.3000
opportunity fund-Rs.500
top 100 equity- Rs.500
equity fund regular- Rs.500
balance fund regular Rs.500
Now I want to add more SIP amounting to Rs.10000 per month for 15 years can you suggest funds.Also from the above I am willing to canceal world agriculture sip.Kindly advise.

Sir,
I am an NRI . The NRI account is in Hdfc . I planned to start mutual fund .I planned to invest 2000 each in five mutual funds for the next 10 to 12 years. I have some suggetions,. HDFC equity, top 200,
ICICI Profocused bluechip, HDFC midcap opportunities, Franklin smaller companies fund, HDFC Prodent, balanced
can you please suggest me 5 mutual fund combined portfolio .

Hemant Beniwal is Principal Financial Planner at Ark Financial Planners. His firm serves Indians across the globe. Apart from developing Financial Plans and guiding clients meet their Financial Goals; he keeps interest in research & analysis of various financial products. His Articles, Quotes & Query Section regularly features in leading Newspapers & Magazines.